Alpha-Win Company Research Report
PCA(9629 TSE First Section)
要旨● SummaryIssued: 12/20/2019

Research Dept., Alpha-Win Capital Inc.
http://www.awincap.com/

Business Description
・PCA CORPORATION (hereinafter, the “Company”) is an independent software manufacturer specialized inpackaged enterprise system software. It is a major specialized player in the industry.
・The Company was founded in 1980. Since then, it has been providing on-premises or cloud-based software
mainly to small- and medium-sized companies. The Company’s mission is to contribute to society as a“management-supporting company” that supports the smooth management and operation of other companies
mainly by providing enterprise system software that realizes high-level automatization.
Current Financial Performance
・The Company's H1 results (Q2 FY 2020) were extremely strong – sales and profit increased for the fourthconsecutive year and record-high H1 sales and profit were achieved. Sales were Y7,169 million (+45.8% YoY)
and operating profit was Y1,771 million (+625.8% YoY). Sales of the cloud and the labor management systembusiness, which are the growth drivers, had continued to grow. In addition, the solutions and the products
contributed significantly to the sales growth, thanks to an event-driven high demand (early demand related toevents such as the consumption tax revision and the termination of support for Windows 7). The Company's
business model has a high marginal profit ratio, so the increase in sales absorbed the increase in costs such as
personnel costs, leading to a significant increase in the profits.
・Also, the Company significantly revised upward its full-year result estimates for FY 2020 (this fiscal year).
Revisions were made as follows: sales of 12,783 → 13,404 million yen (+17.2% YoY), operating profit of
1,478 → 2,405 million yen (+92.7% YoY), and net profit of 976 → 1,572 million yen (+73.5% YoY). This
new forecast is well above Alpha-Win Research Department's expectations, which had already been higher
than the Company’s previous forecast. With continued strong performance of the cloud and the labor
management system and the event-driven high demand especially in H1, sales and profits are expected toincrease for the fifth consecutive year as well as hit their all-time highs.
Competitiveness・The Company has a customer base of approximately 240,000 companies. It has a high brand recognition andtop-ranking market share in the fields of accounting and finance toward small/medium-sized companies. The
Company’s cloud-based enterprise system software business in those fields is especially strong, continuing torank No. 1 in the industry as a pioneer in the business. Going forward, we should pay attention to the changes
in the competition with its major competitors who have entered the cloud service business at a later stage.
・The Company’s strengths are its ability to concentrate business resources in its field of expertise as a specialist
to develop products and services that meet various customer needs, including those related to changes in tax
and other regulations, before its competitors. It also has a stable customer base and can provide high-quality
products and services at reasonable prices.
Business Strategy
・As the basic business strategy for its corporate group, the Company aims to create a strong earnings base for its
main businesses (reinforce and increase the sales of PCA Cloud and strengthen the on-premises business), create
new business opportunities, and strengthen the business structure to become a highly profitable company. In
addition, the Company has started a new strategy – the reinforcement of product creation – through which it
hopes to enter another growth phase by providing new products and services.
・The medium-term business plan announced last year remains unchanged for now. However, it is almost certainthat during this fiscal year the Company will achieve results that are greater than the consolidated numericaltargets for the final year (FY 2022) – sales of at least Y11.5 billion (of which the subscription-based business’s
1/45
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 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. Intellectual property of thisReport 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
PCA (9629 TSE First Section)
Issued: 12/20/2019
sales are Y6 billion), an operating profit of at least Y1.5 billion, and an operating margin of at least 10%.
Consequently, at the beginning of next fiscal year, the Company will most likely announce upward revisions to
the target figures and a more specific medium- to long-term strategy.
Alpha-Win Research Department’s Forecast on Financial Results
・Even after October, we have seen very little fallback from the high demand related to the consumption tax rate,
and the sales of the cloud, the products, etc., seem to be continuing to be strong. Taking into account the cost
assumptions for H2, we believe that the Company’s sales and profit targets for the current fiscal year areconservative and have room for further upward revisions. In the next fiscal year, a temporary decline in sales
and profits due to the anticipated fallback from the event-driven high demand seems inevitable. However, since
the subscription-based business is in a phase of continuous expansion, we believe that the Company will be able
to keep the rate of decline in sales and profits low compared to the previous period of fallback following eventdriven high demand if the Company conducts appropriate cost control. Based on normalized figures after theend of the event-driven high demand, we estimate the medium- to long-term profit growth rate to be 8-10%.
Stock Price・ A defensive, domestic-demand-related, small-cap growth stock that is positively affected by the rise in
consumption tax and the work-style reform. Stock price soared once again in response to the announcement ofa major upward revision to the full-year forecast for this fiscal year. It has reached the highest price since thebeginning of the year and has been significantly outperforming the TOPIX. Although the valuation of theCompany is slightly higher than the average of the First Section of the TSE, it is still cheaper than its competitors.
Given the recent strong performance, the expectation that profit will be greater than the full-year forecast, andthe expectation that performance over the medium to long term will be strong thanks to the subscription-based
businesses as the driving force, there seems to be potential for a further rise in the stock price.
Shareholder Return
・The Company has been stably paying dividend (a dividend payout ratio of about 33%) and has been buying
back its shares. This fiscal year, it plans to keep the dividend at Y31 per share per year. When the Quo Card
shareholder benefit plan is taken into account, the actual dividend yield comes out to be 1.0% (at maximum).
With the strong performance, enhanced shareholder return such as dividend hike, stock split, and share buyback
are also possible.

 9629 PCA
FY
2017
2018
2019
2020
2020
2021
2022
2019
2020
2019
2020
2019
2020

CE
E
E
E
Q1
Q1
Q2
Q2
H1
H1

Sector: Information & Communication  Figure A
Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPS

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

（%）

(Y )

(Y )

（Y ）

―
174.1
105.5
73.5
93.2
-25.7
19.2
-64.6
945.3
1,761.1
404.8
83.0
500.8

23.49
64.37
133.25236.40263.11
195.45233.04
5.09
54.76
23.52
122.2828.61
177.04

1,568.59
1,644.39
1,789.76―
2,021.85
2,176.31
2,376.35
1,624.69
1,848.46
1,699.55
1,975.61
1,699.55
1,975.61

31.00
31.00
31.00
31.00
41.00
33.00
33.00
0.0
0.0
0.0
0.0
31.00
31.00

9,360
9,785
11,43913,404
13,60012,60013,350
2,346
3,073
2,571
4,096
4,917
7,169

10.9
4.5
16.9
17.2
18.9
-7.4
6.0
11.3
31.0
8.7
59.4
9.9
45.8

432
807
1,248
2,405
2,700
2,000
2,400
57
587
187
1,184
244
1,771

957.9
86.8
54.7
92.7
116.3
-25.9
20.0
-67.1
917.5
-28.6
535.5
-44.1
625.8

463
834
1,277
2,435
2,730
2,030
2,430
69
598
199
1,191
268
1,789

593.6
79.9
53.0
90.7
113.8
-25.6
19.7
-62.3
754.6
-27.7
501.6
-41.7
567.7

160
441
906
1,572
1,750
1,300
1,550
34
364
162
813
196
1,177

Dividend(Note) CE: the Company’s estimate/forecast. E: estimate/forecast by Alpha-Win Research Dept. Q1 (first quarter): April-Juneof each year. Q2 (second quarter): July-September of each year. H1 (first half): April to September of each year. All fiscal
years discussed in this document are March-ending.
(Note 2) Hereinafter, differences due to rounding, processing during calculations, the method of display, etc., may cause values
for the same item to not match completely.

2/45
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 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. Intellectual property of thisReport 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
PCA (9629 TSE First Section)

Issued: 12/20/2019【 Stock Price and Valuation Indicators: 9629 PCA 】 Figure B
as of 12/20/2019

Item
Stock Price (Y)Shares Outstanding (thou.)Market Capitalization (million yen)

Item

P/E

Dividend Yield

Dividend Payout Ratio

2.8

0.6%

23.3%

2.5

0.8%

15.6%

0.6%

16.9%

P/B

5,100

Last FY (actual)

38.3

7,700

This FY (est.)

19.4

39,270

Next FY (est.)

26.1

2.3

Equity Ratio at Last FY-End

0

Dilutive Shares (thou.)

59.3% Last FY’s ROE

7.8%(Note) Estimates/forecasts were made by Alpha-Win Research Dept.

【Stock Chart (end-of-week prices) : 9629 PCA】

Figure C

(Y)

4.00

4,900

Stock price (left axis)

4,400

3.50

Price relative to TOPIX (right axis)

3,900

3.00

3,400

2.50

2,900
2,400

2.00

【Performance】
PeriodReturn vs. TOPIX
1 month27.5%
24.3%
3 months
33.2%
28.1%
6 months
25.5%
13.3%
12 months
155.0%
130.6%

1,900
1.50

1,400

9

(M
M
/Y
Y
)

9

/1
08

8

/1
04

/1
12

8
/1
08

8
/1
04

7
/1
12

7
/1
08

7
/1
04

/1
12

/1
08

6

1.00
6

900

(Note) Reflects stock price and index
values up through 12/20/2019. Preparedby Alpha-Win Research Dept.

(Note) From the fourth week of August 2016 to the third week of December 2019

3/45
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 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. Intellectual property of thisReport 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
PCA (9629 TSE First Section)

Issued: 12/20/2019

Contents
1．Company Overview ......................................................................................................................... P5
Major Specialized Player in the Enterprise System Software Industry ............................................. P5
Business Philosophy .......................................................................................................................... P7
2．Business Description and Business Model ..................................................................................... P8
Enterprise System Software Necessary for Efficient Business Operations ....................................... P8
Business Model with High Continuity and Marginal Profit Ratio .................................................... P9
Expansion of Highly Stable and Profitable Subscription-Based Businesses .................................... P9
Cloud Business as the Growth Driver ............................................................................................. P11
Topic: (Due to contract and copyright issues, this section was deleted) ........................................... P12
3．Shareholder Composition .............................................................................................................. P13
Change in Composition by Type of Shareholder ............................................................................ P13
Major Shareholder Composition ..................................................................................................... P13
4．ESG.................................................................................................................................................... P15
Environment, Society, and Governance .......................................................................................... P15
5．History of Growth .......................................................................................................................... P17
Company History ............................................................................................................................. P17
Past Transition in Financial Results ................................................................................................ P17
6．Business Environment ................................................................................................................... P21
Market Trend for Enterprise System Software ................................................................................ P21
Comparison with Competitors ......................................................................................................... P22
7．First-Half Results and Full-Year Forecast for This Fiscal Year ............................................... P25
Results for the Second Quarter (first half) of FY 2020 ..................................................................... P25
PCA’s Financial Forecast for FY 2020 (this fiscal year) ................................................................ P29
Alpha-Win Research Dept.’s Financial Forecast for FY 2020 (this fiscal year)............................... P32
8．Growth Strategy ............................................................................................................................. P34
Management Indicator Targets and Areas of Focus ........................................................................ P34
New Medium-to-Long-Term Vision
PCA Vision 2030: 1st Stage – Medium-Term Business Plan to 2021 .................................... P34
Alpha-Win Research Dept.’s Financial Results Forecast for the Medium Term ............................ P37
9．Analyst’s View ................................................................................................................................ P39
PCA’s Strengths and Challenges ..................................................................................................... P39
Shareholder Return and Shareholder Benefit Program ................................................................... P40
Stock Price and Factors that May Affect Stock Price ..................................................................... P42

Note: Upon translating to English, when the page numbers differed from the original Japanese version, they
were adjusted to those of the English version of this Report.

4/45
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
PCA (9629 TSE First Section)w Major specialized player
in the industry with 39
years of practice,developing andproviding packaged
enterprise system
software forsmall/medium-sizedcompanies(1) Enterprise system: a part ofa company’s information
system that deals with matters
directly affecting business, suchas financial accounting,production control, sales andinventory control, purchases,
HR, and payroll. A generalterm for back-officeapplications. Also called themission-critical system, it
serves as an important coresystem for operations/services.
(2) Labor management system:
also called the attendance
management system, it
manages/utilizes various info
on working hours. Can
automatically aggregate dataon working hours, etc., andprepare data to link withpayroll software. Provided as
on-premises or by cloud.
w The Group is composedof the Company and 3
subsidiaries.
w Acquired Keepdata, acompany withtechnologicaldevelopment capability,
know-how, and provenrecord, as a foothold forthe data utilization
business
w All fiscal years in thisdocument are Marchending unless otherwise
noted (e.g. FY 2020 ends
in March 2020).

Issued: 12/20/2019

1. Company Overview◆ Major Specialized Player in the Enterprise System
Software Industry
PCA CORPORATION (hereinafter, the “Company”) is an independent,
mid-tier, specialized company in the software industry. The Company
is a specialist in developing and selling packaged software (software
prepared for use in certain operations) for enterprise systems1, such as
those for accounting and tax. It is a major player as a specialist in such
software for small/medium-sized companies. About 240,000 companies
are active users of the Company’s products. Sales toward ordinary
companies comprise greater than 90% of the total sales. With regards tothe size of the corporate customers, the Company is especially strong inbusiness toward small/medium-sized companies with 50 to 100
employees. 80% of the Company’s sales are made via dealers (theremaining 20% are direct sales). It has the largest transaction with thedealer RICOH (sells the Company’s software along with its own
hardware such as office appliances), which contributes to about 22% of
the Company’s total sales. The Company’s customers are diversified,with major companies as its largest customers by monetary value. It
ranks No. 1 in the accounting software industry for public benefit
corporations, with software implemented by over 8,000 corporations.
As of the end of November 2019, the Company’s group is composed ofa total of four companies: the Company and three consolidated
subsidiaries. The consolidated subsidiaries are Xronos Inc.
(development/sales of labor management system2 and time recorders;the Company founded this subsidiary in 2001 and owns 80% of theshares), KEC Corporation (implementation support, operation,
maintenance, and other services for PCA’s products/services; wholly
owned and founded in 1998 by the Company), and the newly acquired
Keepdata Ltd. (hereinafter, “Keepdata”).
The Company acquired Keepdata in March 2019 and made it its
subsidiary (acquired 66.8% of the shares for approximately Y44
million). The subsidiary is included in the consolidated financial results
starting this fiscal year (FY 2020). Keepdata’s strength is its originallydeveloped system (KeepData Hub: cloud service targeting large
companies) that enables real-time integration of various big data suchas IoT and the one-stop management of the accumulation, aggregation,and visualization of data to facilitate effective data utilization. As amanagement-supporting company, the Company intends to use thissystem as a foothold for a new service that provides a platform for datautilization to small and medium-sized companies. In addition, in the
future, the Company plans to integrate this system with its own
operation-related product development to create synergy in technology
and business development. Specific strategies and measures are
currently being formulated.
Keepdata posted sales of Y120 million, a net loss of Y262 million, andnegative net assets of Y66 million in FY 2018 (ended September);
upfront investment costs associated with system development had
caused a net loss and an excess of debt. Since the development of the
5/45

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
PCA (9629 TSE First Section)

Issued: 12/20/2019
system has already been completed, the Company expects profit andloss for this fiscal year to be close to zero, but a net loss may still be
posted, although in a smaller amount. For the time being, the impact of
this subsidiary on the Company’s results is expected to be limited.
As for MACS System Corporation (development/sales of computer
software for medical office use such as electronic medical records; theCompany acquired it as a subsidiary in 2008 and owned 80% of its
shares), it was a consolidated subsidiary up through last fiscal year (FY2019), but the Company sold it in February 2019 since the business was
unprofitable. Thus, the Company is making progress with therestructuring of its business portfolio.

w Consolidated-toparent-company sales
ratio has stayedaround 1.1. The
summed recurring
profit of theconsolidated
subsidiaries has also
been positive and has
been increasing.

The ratio of consolidated-to-parent-company sales has stably remained
around 1.1, indicating that a greater weight is placed on the parent
company’s financial results (Figure 1). Although the subsidiaries’
profits and losses are not disclosed, the ratios of consolidated-to-parentcompany recurring profit have been in the range of 1.0-1.6 during the
fiscal years that the Company has been in the black (including this fiscal
year’s forecast). Additionally, the summed profit/loss of the threesubsidiaries, calculated by consolidated minus parent company
recurring profit, has been a surplus since FY 2016 (Figure 2). Amongthe subsidiaries, Xronos seems to be continuing to contribute the mostto the financial results, thanks to the work-style reform (Xronos’ results
are not disclosed).

[Figure 1] Ratio of Consolidated-to-ParentCompany Sales (ratios shown on upper portion ofgraph)

Sales of parent company

Unit: million yen

Consolidated sales minus parent company sales

16,000

1.1

1.1

1.1

1.1

1.1

1.1

1.1

14,000Consolidated
to parent
company
ratio

1,156

12,000712
782

10,000

825

732

8,000

680

681

12,2486,000

10,727

9,693
4,000

7,487

7,761

FY 2015

FY 2016

8,628

8,960

FY 2017

FY 2018

2,000
0[Figure 2] Ratio of Consolidated-to-ParentCompany Recurring Profit (ratios shown on upper
portion of graph)

FY 2014

Unit: million yen

R.P. of parent company

3,000

1.2

NA

1.6

FY 2019

FY 2020 (E )Consolidated R.P. minus parent company R.P.
1.1

1.0

1.2

1.2

2,500

Consolidated
to parent
company
ratio

477
2,000

【 図表 2 】経常利益連単倍率（グラフ上部の数
1,500
字が連単倍率、単位：倍）
1,000

221

500

918

238
34
59
800
26

0

-139

1,928
1,039

405

41

-19
-500
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020 (E)(Ref) Figures 1 and 2 were both prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecasts (E) are fromthe Company’s business plan.

6/45
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
PCA (9629 TSE First Section)
w Founded by certified
public accountants in
1980
w Rich in cash anddebt-lessIssued: 12/20/2019
The name of the Company comes from the five founders who werecertified public accountants (CPA); the letters CPA were shuffled into
the meaningful name P (Professional) C (Computer) A (Automation).
The Company’s finance is firm, rich in cash and debt-less. Relative toits sales of Y13.4 billion (this fiscal year’s forecast), total assets of
Y21.7 billion, and market capitalization of approx. Y29.8 billion, its
cash and deposits are abundant, at Y9.5 billion, and increasing (values
from the B/S as of the end of Sept. 2019). Free cash flow (FCF) has
been positive except for a certain period, and cash and deposits on the
B/S have been increasing (Figure 3). The financial ratios, including theequity ratio of 60.7% and the current ratio of 238.1%, indicate financial
soundness (value as of the end of September 2019).

[Figure 3] Transition in Cash Flow (unit: million yen)
Unit: million yen
Operating CF ①
Investing CF
Financing CF
FCF (①+②)
Cash and Deposits (on B/S)FY 2010
FY 2011
FY 2012FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
627
488
141
847
1,048
547
1,427
1,533
1,270
-405
-127
185
-407
-750
-606
-627
-395
1,715
-207
-210
-205
-215
-216
-284
-214
-215
-216
222
361
326
440
299
-60
800
1,137
2,985
6,817
5,970
5,493
6,621
6,606
6,154
6,612
7,487
7,269

FY 2019
FY 2019 (this H1) FY 2018 (last H1)
2,141
1,402
818
-80
-2
556
-572
-225
-213
2,061
1,400
1,375
7,280
9,506
7,280

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary.
(Note) Cash and deposits shown are values from the balance sheet, not values used in the CF calculation.

◆ Business Philosophy
w The Group’s basic
business policy is to“aim for a morerational business withclear vision.”w The mission statement
is to “contribute tosociety by developing
and providing
packaged enterprisesystem software thatrealizes advanced
automation.”

The Company’s business philosophy was announced as “customer-first”
when it made its first public offering in March 1994. Then, in 2010, theCompany laid out the three key ideas of its business philosophy and 34
rules for the code of conduct and announced that the basic business
policy for its corporate group is to “aim for a more rational businesswith clear vision.”
The Company’s mission statement is to “contribute to society by
developing and providing packaged enterprise system software thatrealizes advanced automation.” While its corporate culture is down-toearth and homely, the Company is also a pioneer in the conservative
industry, conducting R&D and launching new products ahead of its
competitors.
The following are the three key ideas of the Company’s businessphilosophy:
1) We will always make our best effort to be customer-first.
2) We will aspire to become a highly profitable company over the longterm with sound management.
3) We will treat our employees like family members and create acompany with a homely culture.

7/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019

2．Business Description and Business Modelw Enterprise systems
are mission-critical.
Stability andreliability are criticalelements since they
are used inside acompany.

◆ Enterprise System Software Necessary for Efficient
Business Operations
The Company’s main business is enterprise systems that support
internal business operations. Unlike systems that simply work on
personal computers, an enterprise system is a computer system that
supports a series of processes throughout all business operation flows
in a company. Since it is mission-critical for business operations, it isrequired to be reliable, efficient, stable, user-friendly, safe, andexpandable.
The main ways for building an enterprise system are package-based
system development and original system development. Generally, themethod of combining sold packaged software into a system has
advantages such as short development time, cheapness, and having
relatively few bugs. On the other hand, its disadvantage is the difficultyin customizing the system to a company’s business conditions,operations, management styles, and other specific needs.

(3) Accounting software:
application software forrecording, processing, andintegrated management ofaccounting data
(4) HR and payroll
software: software forpayroll calculations andHR management

As for original software development and implementation, outsourced
development and in-house development are the two options. In either
case, the advantage of an original system is that it can be made to beuser-friendly since it can be customized to a company’s needs andoperations. However, development cost and time are larger and longer,
and it requires revisions, addition of functions, and maintenance after
implementation. Micro-sized, small-sized, medium-sized, and mid-tiercompanies will especially find the development, implementation, andoperation of original software difficult due to financial, staff, and time
constraints.
In response to such needs, the Company has been developing original
enterprise system software that especially meets the needs ofindividuals or micro-sized (SOHO), small-sized, medium-sized, andmid-tier companies in areas such as accounting3, finance, HR andpayroll4, sales management, purchasing and inventory management, tax,
and medical and medical office work. The enterprise system software iseither packaged (on-premises: conventional products operated in-houseby a corporate customer) or cloud-based (a service where the corporate
customer can operate the enterprise system software via the Internet
easily and at a low cost without having to prepare its own server). The
enterprise system software is sold and distributed by direct or indirect
methods.
Additionally, the Company has not only been developing and sellingenterprise system software but has also been expanding its business byproviding consulting services based on solution proposals. With its
subsidiaries, the Company has also been providing various support
services such as maintenance service and implementation/operation
support. Going forward, the Company plans to further strengthen thesebusinesses.
8/45This 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
PCA (9629 TSE First Section)

w Provides about 16
types of originallydeveloped packaged
enterprise system
softwarew About 70% of sales
comes fromoriginally developed
products and services

w Entry barrier is high,since reliability andproven track record
are required.

Issued: 12/20/2019◆ Business Model with High Continuity and Marginal
Profit Ratio
The Company provides 16 types of software and its business model isbased on the mass production of several types of products. Due to thenature of its business, its marginal profit ratio is high. Its original
products and services (products/maintenance/cloud) account for greaterthan 70% of the total sales, while the remaining 30% comes from goods
and other companies’ products (purchased goods). From thedevelopment to the release of a new product, approximately two years
and a corresponding amount of cost are necessary per product. Version
upgrades (revision updates), which are prepared as needed, are released
usually in a one- to two-year cycle. In recent years, software functions
have become so enhanced that the customers seem to be purchasing lessin response to this version upgrade cycle.
Since these types of software are related to operations that require highreliability, and since software replacements give rise to issues of cost,labor, and data continuity, their users show little interest in actively or
frequently replacing their current software with an alternative of adifferent company. Therefore, customer loyalty is high, and contracts
have high repeat rates (50% to 90% or greater depending on the type ofsoftware). The barrier to market entry is high because trust and brandrecognition are a must in this industry and its companies are currently
mostly being able to exist alongside one another by taking strong
positions in different niches.

◆Expansion of Highly Stable and Profitable SubscriptionBased Businesses
w Changed its businessmodel – now focusedon the subscriptionbased businesses.

Until FY 2016, sales and profit/loss were disclosed for the four businesssegments of “for ordinary companies,” “for non-profit organizations,”“medical,” and “cloud.” In FY 2017, all business segments became
consolidated. Sales are now disclosed for fives sales categories (types):“products,” “goods,” “maintenance service,” “cloud service,” and“other operating revenue” (also called “solutions”) (Figure 4). Profit
and loss by segment are no longer disclosed.

[Figure 4] Sales Classification (by category)Sales Classification by
Category

Details

Sales of original packaged software (accounting, sales management, purchasing and inventory
management, payroll, HR, etc.) (includes version upgrades)
Sales of other companies’ products such as business forms
Goods
Maintenance Service By signing up to PSS membership, one can receive inquiry and support services from call centers
Subscription service for software provided via the cloud
Cloud Service
Sales of other companies’ products such as software/hardware combined with its original products; also
Other Operating Revenue
called “solutions”

Productｓ

Total & Average

FY 2019 (actual result)
Sales (million % of Total
Est. Gross
yen)
Sales
MarginH1 FY 2020 (actual result)
Sales (million % of Total
yen)
Sales

2,516

22.0 approx. 40%

1,842

25.7

566
3,125
2,403

4.9 approx. 40%
27.3
80-90%
21.0
60-70%

219
1,699
1,569

3.1
23.7
21.9

2,830

24.7 approx. 25%

1,841

25.7

11,439100.0 Actual: 57.0%

7,170

100.0

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and interview. Includes estimates. Sales for each category are based on the new standards.

During FY 2019, the maintenance service contributed the most to total
sales (Figure 4 and Figure 5 on page 10), serving as a stable source ofprofit. In recent years, the sales of the cloud service for packaged
software have largely grown. In fact, the cloud service is becoming a
growth driver for the entire company with regards to both sales and9/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019
profits. Subscription-based revenue, which is the sum of themaintenance service and the cloud service, accounts for about 50% of
the total sales, contributing to greater stability in management and profit.
Both the maintenance service and the cloud service have a high grossmargin and continuity.

w Subscription-based
maintenance andcloud businesses(“stock businesses”)
account for about
50% of the total sales.

On a consolidated basis, sales breakdown by the operation type ofsoftware is not disclosed. However, the sales seem to be diversified,with the sales for “accounting software” predicted to be the largest bycomposition (about 15% of the total sales), followed by “sales
management and purchase & inventory management,” and then by“payroll and HR.”
Currently, as the Company’s primary internal management targets,goals are set for software sales (or the sold number of products) byoperation type. Profit and loss by the operation type of software are nottargets of management. However, going forward, the Company plans todevelop and establish a performance management indicator for eachinternal organizational unit, etc., and make a transition from sales-based
management to profit-based management. The Company hascommented that the profit/loss values for each software operation type
do not greatly differ between one another, but the main accounting
software business is assumed to be generally highly profitable.
Meanwhile, since the profitability of the business for medical softwareand related products, which was started at a later stage, had worsened
due to upfront investment costs such as sales promotion anddevelopment expenses, the Company sold the subsidiary concernedwith the business and withdrew from the business (past disclosuresindicate posting of a loss for this business segment).
The percentages of new software sales or version upgrade sales over the
total sales change every year, but the percentage of version upgrades
has always been greater than 50%. As a side note, the Company’s onpremises products tend to be installed and used by users on a single PC(stand-alone).

w 製品開発は、あたり約年[Figure 5] Change in Full-Year Sales and Sales Breakdown (unit: million yen, %)の期間と億円の開発費
を要する。
YoY
Change6,000

Solutions

Goods

8,440
2,069
1,767
854

955

0

3,026

3,098

9,785
1,954
988

128.8%
2,516

103.2%

51.2%

1,020
123.6%
2,322

1,878

3,109

1,152

1,496

1,854

FY 2016

FY 2017

FY 2018

3,125

100.5%

2,452

132.3%

48.8%

Subscription-Based

1,740

4,000
2,000

116.9%
11,439

9,360

1,639

% of Total Sales

One-Time-Fee-Based

8,000

Maintenance

Products

12,00010,000Full-YearCloud

FY 2019(Ref) Excerpt from the Company’s financial results briefing supplemental materials, reworked by AlphaWin Research Dept. Sales for each category are based on the new standards.

10/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019◆ Cloud Business as the Growth Driver
Until recently, the Company had focused its business on selling
conventional packaged software, also known as on-premises. However,as the Internet became more sophisticated and more widely used, theCompany predicted that demand for the cloud will rise due to its userfriendliness and cost performance. Therefore, since 2008, the Company
has been providing cloud versions of the same software as the onpremises, more than ten years ahead of its competitors.

w The rapidly growing

cloud is based on a
subscription-based,stable business model.
Taking a lead in theindustry, theCompany has acompetitive
advantage.

(5) API (Application
Programming Interface):interface/network to
operate software; connects
the software and theprogram.
(6) Kintone: cloud service
for building business app
on a web database,provided by Cybozu.
Allows easy system buildup and linkage with othersystems.

This cloud business, where the users pay fees continuously for a certain
period of time to use the software (subscription-based business model),is attractive as a stable, subscription-based business model similar to themaintenance service (average monthly payment of 20-30 thousand yen
per corporate user). As the cost of this cloud business is largely fixed,with small variable costs such as those related to server maintenance,
manufacturing, sales, and logistics, this business has a high marginal
profit ratio.
The Company leads the industry as No. 1 in cloud-based enterprisesystem software for small/medium-sized companies. The advantages
listed below seem to make the Company stand out from its competitors
in the field. In recent years (2017-2018), its competitors have entered
the cloud market in full scale as their “first year of the cloud,” but theCompany is expected maintain its advantage for the meantime.
・ Providing a wide variety of advanced software for business operations
・ Originally developed open architecture and low cost・ Economies of scale are in effect, with more than 13,000 companies
already using the cloud as customers, contributing well to theCompany’s profit
・ Consequently, it has a very strong price advantage compared to its
competitors
・ 12 years’ worth of operation know-how
・ User-friendly, with WebAPI5 allowing linkage with other companies
on the cloud (already linked with about 60 companies, including
Kintone6 of Cybozu)
As shown in Figure 6 on page 12, the Company has recently been
focusing its business on the cloud service, and the number of contracts
as well as sales has been growing steadily. The business’s growth rate
has been accelerating along with the expansion of scale, making it theCompany’s main driver of business growth.

11/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019[Figure 6] Transition in the Number of Companies that Have Implemented PCA Cloud and the Sales of PCA Cloud
16,00014,00012,0003,500

Sales of the cloud service (right axis: million yen)

# of companies that have implemented PCA Cloud(left axis: companies)

3,000

2,500

10,000
2,000
8,000
1,500
6,000
1,000

4,000

500

2,000
0

0
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
(E)

(Note) Sales from FY 2008 to FY 2010 have not been disclosed. Estimates are partially included in the number of companies thathave implemented PCA Cloud.

(Ref) Prepared by Alpha-Win Research Dept. using information including those from the Company’s financial results briefing materials andinterviews. (E) represents estimates/forecasts made by Alpha-Win Research Dept.

◆ Topic: (Due to contract and copyright issues, this section(7)

was deleted)

12/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019

3． Shareholder Composition◆ Change in Composition by Type of Shareholder
Regarding shareholder composition by shareholder type as of the end of
March 2019 (Figure 7), the sum of “other corporate entities” and“individuals, etc.” accounts for approximately 80% of all shares.
“Overseas corporate entities, etc.” and “financial institutions, etc.”
account for only 11% and 7%, respectively, but the share of “overseas
corporate entities, etc.” is gradually rising.

w Shares weretransferred due toinheritance and otherevents, but there has
been no substantialchange in the major
shareholder
composition.

Certain individually owned shares were transferred upon inheritancefrom the founder (Mr. Kawashima) and then transferred in FY 2017 toa general incorporated association (the founder family’s asset
management company, categorized under “other corporate entities”).
However, no substantial change occurred in the composition of major
shareholders.
[Figure 7] Change in Shareholder Composition by Type of Shareholder (unit: %)

90
80
70

Other
corporate
entities
Individuals, etc.

60
50

45.50

40

36.17

30
20

Overseas
corporate
entities, etc.
Financial
institu tion s, etc.

10.94
6.94

10
0
FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

at year-end(Ref) Prepared by Alpha-Win Research Dept. based on the securities report◆ Major Shareholder Composition
Major shareholders as of the end of September 2019 are shown on
Figure 8 on page 14.
ww。MSIP CLIENTSECURITIES entered
the ranking for the
first time as the thirdlargest shareholder
with 3.8% of theshares, replacing
GOLDMAN SACHSINTERNATIONAL.

Compared to the end of March 2019, the key difference is that
GOLDMAN SACHS INTERNATIONAL, which had appeared in the
major shareholder ranking for the first time in the previous report as thesecond largest shareholder (ranking excluding treasury shares; the same
applies below), was replaced by MSIP CLIENT SECURITIES (third
place), Japan Trustee Services Bank, Ltd. (trust account; seventh place),and BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT
ACCOUNTS M LSCB RD (eighth place). Their investment purposes
are unknown, but since some accounts have a history of investment invarious Japanese stocks, they are predicted to be purely investments byinstitutional investors, funds, etc., through trustees.
Although there have been some changes in the shareholding ratios, theother major shareholders and the number of shares they own have notchanged significantly. Below is supplemental information:
13/45

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
PCA (9629 TSE First Section)
w The founder family’s
asset managementcompany is the largest
shareholder withgreater than 40% of allshares. This,
combined with thetreasury shares andthe Employee Stock
Ownership Plan,
amounts to more than
50% of all shares,
indicating stability.
w OBC, its rival, is also amajor shareholder.

Issued: 12/20/2019
・The largest shareholder Kawashima Co., Ltd. is the asset managementcompany of two directors of the Company (president Sato and Mr.
Kumamoto) and their relatives (descendants to the founder Mr.
Kawashima).
・ The Company has essentially been the second largest shareholder.
After Kawashima Co., Ltd. indicated its intention to sell its shares, theCompany additionally acquired 200,000 shares (equivalent to 2.6% ofoutstanding shares) by a tender offer by December 2018. As a result,
the Company now owns a total of approx. 13.6% of its own shares.
Currently, the Company has not yet decided on how to effectively use
its treasury shares, but some possibilities include stock-based
renumeration for its officers and employees, cancellation of stock, andstock-swap in a tie-up or an M&A.
・The second largest shareholder Obic Business Consultants Co., Ltd.
(OBC) is a competitor with no transaction with the Company. Mr.
Shigefumi Wada, the ninth largest shareholder, is the current presidentof OBC. In either case, their purposes are unknown. While there has
been no change in the number of shares held under the corporate
account, shares held under the personal account are declining.
・The fourth largest shareholder Mizuho Bank, Ltd. is holding sharesprobably for the purpose of cross-shareholding.
・ The fifth largest shareholder Logic Systems Co., Ltd.’s purpose isunknown.
・Shares held by the sixth largest shareholder PCA Employee Stock
Ownership Plan have decreased, perhaps because of some shares weresold in response to the rising stock price.
・The tenth largest shareholder Nagoya PCA Co., Ltd. is the company towhich software development (SHOKON and other products of theCompany) is outsourced.

w Currently, there is noactivist-like behavior.
Anti-takeovermeasures have notbeen adopted.

・GOLDMAN SACHS INTERNATIONAL (as described above), State
Street Bank and Trust Company 505001, and KBL EPB S.A.107704
were previously listed as major shareholders but no longer belong in the
top ten. They have probably sold a part or all of their shares.
・Currently, there are no major shareholders with activist-like behavior.
Also, the Company has not adopted any anti-takeover measures.

[Figure 8] Major Shareholders’ Status
Kawashima Co., Ltd.
PCA CORPORATION (treasury shares)
Obic Business Consultants Co., Ltd.
MSIP CLIENT SECURITIES
Mizuho Bank, Ltd.
Logic Systems Co., Ltd.
PCA Employee Stock Ownership Plan
Japan Trustee Services Bank, Ltd. (trust account)
BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT ACCOUNTSM LSCB RD
Shigefumi Wada (individual)
Nagoya PCA Co., Ltd.
GOLDMAN SACHS INTERNATIONAL
State Street Bank and Trust Company 505001

KBL EPB S.A. 107704
APPLIED SYSTEM LABORATORY Inc.
Reiko Sato (individual): Heir to the founder Mr. Kawashima
Tomoko Kumamoto (individual): Heir to the founder Mr.
Hiroko Wada (individual)(Ratio of treasury shares)

Unit for shares owned: thou. shares

For ratios: %End of Mar.
2015

End of Mar.
2016

End of Mar.
2017

End of Mar.
2018

End of Mar.
2019

End of Sept.
2019

―
848
254

―
848
254

2,935
848
254

2,935
849
254

2,736
1,049
254

121
114
110

121
114
119

121
114
127

121
114
127

121
114
135

2,735
1,045
254
250
121
114
108
108

41.11
13.57
3.81
3.76
1.81
1.71
1.64
1.63

1
―
2
3
4
5
6
7

107

1.62

8

181
―

181
100

181
100

1.60
1.50

9
10

249
―
―
1,467
1,467
―
11.0

266
―
86
―
―
―
11.1

112
100
303
174
94

106
100

244
―
―
1,467
1,467
358
11.0

151
100
―
266
90
86
―
―
―
11.0

13.6

13.6

←% of Total Shares ←Ranking(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and the general shareholders’ meeting reference materials.
(Note) The official English name could not be verified for some.

14/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019

4． ESG
There have been no large changes with regards to ESG. The Company
has been conducting ESG activities on a steady basis as usual.
◆ Environment
Although the Company does not directly own any production facility
and therefore does not harm the environment, it still makes
consideration for energy/electricity conservation.

w Proactively

supporting thedisabled and thediscovery andtraining of IT talents◆ Society
In its mission statement, the Company has declared to “support its
customers’ business management through enterprise system software.”
The idea is that by contributing to improved user convenience andefficiency, it is fulfilling its responsibility as a member of the society.
In addition, the Company has become a gold sponsor of the U22
Programing Contest backed by the Ministry of Economy, Trade, andIndustry. As a sponsor, it supports the stimulation of Japan’s
technologies and innovations and the discovery and training of talented
programmers who will shape the future. In addition, the Company
sponsors and supports athletics promotion activities such as themarathon.

Also, in order to support the reconstruction after the Great East Japan
Earthquake and help the people who suffered from it, the Company
made a donation to the incorporated non-profit organization Médecins
Sans Frontières (MSF) Japan. Furthermore, it provided freereplacements for the Company’s products (CD-ROMs, manuals, etc.)that were damaged or lost due to the Earthquake.
The Company also operates a farm in Chiba Prefecture where it
proactively hires physically disabled staff. It also purchases flowers,
lunchboxes, bakeries, etc., produced by a company that hires physicallydisabled staff.
w Promoting diversity
by improving gendermix. Has set goals toincrease thepercentage of women.

As a general employer action plan based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace, theCompany has set goals to “continue to hire new female employees at aratio of 40% or greater for new hires, raise the percentage of female fulltime employees from the current 25% to 30%, and create a foundation
for raising the number of future female managers by raising thepercentage of women in our company.” The Company is promoting theworkplace retention of women and making efforts to promote greater
female participation. One outside director and one outside auditor are
women.
◆ Governance
For internal control, the Company has set up an internal audit office,directly under the control of the president, that operates in cooperation
with two outside directors. It has also set up a risk-control committee

15/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019
with the president as the chairperson to create a risk control system thatcan flexibly, quickly, and appropriately respond to the risks.
As of December 2019, the Company does not have an executive officer
system. The management team consists of six directors (including two
outside directors) and four auditors (including three outside auditors,
one tax accountant, one CPA, and one lawyer).

16/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019

5． History of Growth
w Founded uponrecognizing theimportance andpromising future ofcomputer andenterprise system
software businesses inJapan

w With a pioneering
spirit, became the firstto begin cloudservices in theindustry(8) SaaS (Software as aService): software where, asa service, one can use thenecessary function in thenecessary amount whenneeded; or the method ofproviding such service.
Instead of the user
installing the software, thevendor operates thesoftware and provides thenecessary function to theuser via a network.
w Changed its market
listing from theSecond to the First
Section of the TSE in
Dec. 2014

w Has been generally
increasing sales overthe long term.
Meanwhile, profit had
not changed
significantly.

◆ Company History
A group of five certified public accountants with the late Mr.
Kawashima as its leader founded the Company in 1980 uponrecognizing the importance and the promising future of computer andsoftware businesses in Japan. At first, they developed and sold businessaccounting software for small business computers. In 1995, in
anticipation of making transition from small business computer users in
the future, the Company officially began the development andmarketing of packaged software for personal computers (PC).
Then, with the emergence of the PC era, the Company has grown mainly
due to the following four efforts: 1) created a greater variety of andversion upgrades for packaged software in Japan, 2) expanded themaintenance service business, 3) developed the cloud business, and 4)
expanded the solutions business which includes providing othercompanies’ products. Furthermore, by increasing the number of offices
and cooperating with manufacturers and dealers, the Company has
developed a nationwide sales/support system that has helped the rapid
expansion of its business. The Company is also seen as a pioneer in therather conservative industry, as it was the first in the industry to begin
providing cloud services (SaaS8) in 2008.
Regarding shares, the first public offering was made in 1994. The
Company became listed on the Second Section of the TSE in 2000 andthen on the First Section in 2014. Upon becoming listed on the First
Section of the TSE, the Company changed its logo to the current one.

◆ Past Transition in Financial Results
Since foundation until now, the Company has been expanding its
business as a specialist in the development and marketing of enterprisesystem software and related businesses, as described above. The
transition in financial results since its first public offering is describedin Figure 9 on page 18. The following is supplemental information on
the financial results, in chronological order:
・ Aside from certain periods such as the post-Lehman economic
downturn and the fallback from the high demand stimulated byrevisions in tax and other regulations, the Company has generally kept
increasing sales since 1994. On the other hand, no significant
improvement had been made for profit, being unable to maintain or raise
the level of profit that it had once achieved.
・ Consecutive decline in sales and profit from FY 2001 to FY 2002

occurred due an economic downturn and the fallback from the highdemand brought by the year 2000 problem.
・The decline in sales for four consecutive years from FY 2007 to FY
2010, as well as the decline in profit for seven consecutive years fromFY 2007 to FY 2013, was caused by decreased demand (due to the postLehman economic downturn, etc.) and increased personnel, R&D, and

17/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019
sales promotion expenses, as well as worsened profitability caused byintensified competition.

w Achieved record-highsales of Y10 billion in2014 thanks to eventdriven high demand・In FY 2014, record-high sales (Y10,475 million) were achieved thanks
to the high demand driven by two events: the termination of Windows
XP support (support ended in April 2014) and the change in
consumption tax (from 5% to 8% in April 2014). The large growth ofthe cloud service also contributed to the record-high sales.
・Decreased sales in FY 2015 are explained by the fallback from the highdemand brought by the two events as described above. Since FY 2016
to this fiscal year, the Company has been increasing sales again thanks
to the continued growth of the cloud, new products, strengthened sales
force, and economic recovery.
[Figure 9] Long-Term Transition in Financial Results
Sales (left axis)

Recurring Profit (right axis)(million yen)(million yen)

16,0003,000
13,40414,000

2,500

2,435
12,00011,4391,783

10,000

1,539
1,290

8,000

1,396

1,565

1,227

1,218

1,084

1,181

10,475
1,582
1,392

7,551
1,181

8,168

1,139
6,805
6,383
798
6,336
6,269
6,006
724
5,597
6,000 660 565
5,441
5,095
4,827
6,275
4,762
4,867
6,167 501
3,5414,551
384
4,000
3,232
5,026
5,867
3,017
794

9,785
9,360
8,441
1277

834

935

2,000

1,500

1,000

463
500
67
0

2,000
-158

-500

FY
1
FY 994
1
FY 995
1
FY 996
1
FY 997
1
FY 998
1
FY 9992
FY 0002
FY 001
2
FY 002
2
FY 003
2
FY 0042
FY 0052
FY 0062
FY 0072
FY 0082
FY 0092
FY 0102
FY 011
2
FY 012
2
FY 013
2
FY 0142
FY 0152
FY 0162
FY 0172
F 018
FY Y 220 01920(E)0(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. Estimate/forecast (E) for FY
2020 is from the Company’s business plan.

(9) ERP (integrated
enterprise system): stands
for Enterprise Resource
Planning. Management
concept based on the
integration and real-timeprocessing of core businessinformation to efficiently
optimize as a whole.
Provided as IT solutions
software for integrating
enterprise systems.
w Record-highoperating profit andrecurring profit in FY
2006

With regards to profit, a record-high net profit (Y937 million) was
achieved in FY 2000, having benefitted from the high demand broughtby the year 2000 problem. Additionally, in FY 2006, record highs wereachieved for operating profit and recurring profit (Y1,747 million andY1,783 million, respectively). Demand stimulated by the revised
accounting regulation for public benefit corporations and by the drasticchanges in regulation caused by the new Companies Act, as well as theCompany’s ERP9 (integrated enterprise system) product Dream 21 (oldproduct name), helped improve profitability, leading to the record highs
in 2006.
For many years, the Company’s gross margin and operating margin had
been gradually decreasing (Figure 10 on page 19). Gross margin
declined due to increased price competition from intensifiedcompetition among packaged software developers during the economic
downturn, worsened product mix from a rise in the percentage of othercompanies’ less-profitable goods, and higher costs especially for laborcosts, production expenses (subcontractor costs), and R&D costs.
18/45

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
PCA (9629 TSE First Section)

Issued: 12/20/2019[Figure 10] Long-Term Transition in Gross Margin and Operating Margin
Gross Margin（％）

Operating Margin

80.0
70.1

70.0

66.4

66.8

66.1

63.2

63.0

61.4

60.3

60.0

53.5

51.0

54.5

57.0

50.0
40.0
30.0
20.0

17.8

17.9
12.7

11.1
6.9

10.0

10.6
4.7

4.6
-2.2

0.0
-10.0

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

8.2

10.9

0.5

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020(CE )(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. The
Company’s estimate/forecast (CE) used for FY 2020.

w A net loss was posted
for two consecutive
years in a fallback
from past eventdriven high demand.

Despite efforts to cut down on cost, a net loss was consecutively posted
in FY 2015 and FY 2016 (net loss for the year: Y207 million in FY 2015
and Y93 million in FY 2016), affected by decreased sales due to thefallback from the event-driven high demand as described above and the
postponed revision of consumption tax to 10%.

w From FY 2016, began
to consecutively raisesales/profit, staying in
the black, thanks to
new products, growthof the cloud, and cost
reduction. Operating
margin improved.

However, since FY 2016, the Company has been increasing sales again
and the decline in gross margin has stopped. Operating margin hasbottomed out and began to gradually increase thanks to increased salesof the new products and the cloud and cost reduction. In recent years,
the Company has been working on a structural reform, including thedisposal of assets with impairment risk (real estate and securities) andshortening of software amortization, and is starting to see positive
results from these efforts. The Company’s success in recent years in thegrowth and recovery of its financial performance was helped by cost
reduction and sales growth of the cloud and the maintenance service
despite domestic sales dwindling just below Y10 billion.

w Thanks in part to thestructural reform,
financial performancerecovered in a Vshaped curve. Highdemand for software
version upgrade(replacement): foraccounting and sales
management softwarein response to therevision of theconsumption tax rate
to 10% and the new
reduced-tax system, as
well as for software
installed in PCs thatwere replaced byusers due to thetermination of theWindows 7 support inJanuary 2020.

Since FY 2017, the Company has been continuously making andincreasing profit. In FY 2019 (last fiscal year), the Company achieved
an increase in sales and a significant increase in profit for the fourthconsecutive year. Due to an event-driven high demand of about a billion
yen in H2 of the previous fiscal year, the financial results were revised
largely upward in the middle of the fiscal year. Sales increased in all
categories, but the sales of the cloud service, the products, and thesolutions especially grew well – by about 20-30% each – thanks to theeffect of the event-driven high demand (rise in the consumption tax rate,termination of Windows 7 support, version upgrades related to thechange in the name of the era, etc., led to an early demand of almost abillion yen, as estimated by the Company). As a result, the Company
achieved record-high full-year sales for the first time in five years since
the record of Y10,475 million attained in FY 2014 when a high demand
was induced by two events.
As a reference, Figure 11 on page 20 shows the comparison of theCompany's initial forecast and the actual results in the past in
chronological order. Although the actual results have sometimes
19/45

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
PCA (9629 TSE First Section)

Issued: 12/20/2019
greatly deviated from the initial forecast, since the recovery phasestarting in FY 2017, sales have been close to the initial forecast andprofits have generally tended to exceed the initial forecast. As a side
note, past announcements of revisions to financial results have often
been made in September or February to April of the following year.

[Figure 11] Comparison of the Company’s Initial Financial Forecast and Actual Results in Chronological Order
Sales

Consolidated
Unit: million yen

Initialforecast

FY 2001
FY 2002
FY 2003
FY 2004
FY 2005
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020 (CE)

5,634
5,104
5,521
6,096
6,870
6,860
6,790
6,800
6,500
5,908
6,505
7,025
8,641
9,198
8,880
9,731
9,876
10,486
12,783Operating Profit

ActualInitialActual result
resultforecast
5,026
1,224
4,762
925
5,095
1,073
5,595
1,170
6,005
1,551
6,383
1,747
6,336
1,533
6,274
1,321
1,325
6,268
1,294
1,117
5,867
1,141
744
6,166
878
686
6,805
806
468
7,550
56
354
10,474
284
1,110
8,168
453
-179
8,440
242
40
9,360
165
432
9,785
645
807
11,439825
1,248
13,4041,478
2,405

Recurring Profit
Initialforecast
1,215
1,015
1,125
1,293
1,780
1,550
1,365
1,360
1,200
927
835
84
311
483
272
187
669
842
1,499

Actualresult
1,227
935
1,083
1,181
1,565
1,783
1,582
1,391
1,181
797
724
501
383
1,138
-157
66
463
834
1,277
2,435

Net Profit Attributable to
Owners of the Parent (hereinafter"net profit")

Initialforecast
589
653
769
1,059
922
812
809
714
519
381
29
141
283
131
51
425
588
976

Actualresult
695
533
576
682
915
327
852
644
680
436
411
75
181
604
-207
-93
160
441
906
1,572

Sales

Operating Recurring
Net Profit
ProfitProfitDifference from initial forecast-15.5%
-0.2%
1.3%
-1.5%
-7.1%
-7.6%
-7.6%
-7.8%
-9.7%
4.4%
4.6%
7.5%
21.2%
-11.2%
-5.0%
-3.8%
-0.9%
9.1%
4.9%

Operating Recurring
Net Profit
ProfitProfitSales

YoY change in actual results- -23.0%
6.7%
-2.2%
5.0%
4.4%
21.0%
19.0%
0.2% -69.1%
2.1%
-7.6%
0.3%
1.9% -20.7%-13.7% -13.2% -15.9%-34.8% -33.6% -38.9%-21.9% -21.9% -20.8%-41.9% -40.0% -80.3%
532.1% 356.0% 524.1%
290.8% 265.9% 328.4%-139.5% -132.5% -173.1%-83.5% -75.7% -171.0%
161.8% 147.6% 213.7%
25.1%
24.7%
3.8%
51.3%
51.7%
54.1%
62.7%
62.4%
61.1%

-5.3%
7.0%
9.8%
7.3%
6.3%
-0.7%
-1.0%
-0.1%
-6.4%
5.1%
10.4%
10.9%
38.7%
-22.0%
3.3%
10.9%
4.5%
16.9%
17.2%

-24.4% -23.8% -23.3%
16.0%
15.8%
8.1%
9.0%
9.0%
18.4%
32.6%
32.5%
34.2%
12.6%
13.9% -64.3%-12.2% -11.3% 160.6%-13.6% -12.1% -24.4%-15.7% -15.1%
5.6%-33.4% -32.5% -35.9%
-7.8%
-9.2%
-5.7%
-31.8% -30.8% -81.8%-24.4% -23.6% 141.3%
213.6% 197.1% 233.7%-116.1% -113.8% -134.3%-122.3% -142.0% -55.1%
980.0% 601.5% -272.0%
86.8%
80.1% 175.6%
54.6%
53.1% 105.4%
92.7%
90.7%
73.5%

Simple average of difference (unit: %), calculated based on the longest period with available data for sales & profits(excluding this FY) →

-1.7%

60.5%

30.2%

32.2%

5.3%

Blue highlight:
Previous record

7 ： 12

7：6

12 ： 7

8 ： 10↑ Simple average for each period(excluding this FY)

Green highlight:
Record highFrom initial forecast, upward revision : downward revision (including thisFY) (unit: # of times)→

55.8%

32.7%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and securities report. Regarding the FY 2020 forecasts/estimates(CE), the Company’s initial forecast is compared with its revised forecast.

20/45
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.

10.3%

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 12/20/2019

6． Business Environmentw Decreasing number ofsmall/medium-sizedcompanies (potential
users) in Japan◆ Market Trend for Enterprise System Software
The number of companies in Japan is on a downward trend, falling
below four million companies (Figure 12). The number ofsmall/medium-sized companies – the Company’s target customer zone
– is especially declining because of small-sized companies10 closing
their businesses. With the decreasing population and aging society ofJapan, the total number of small and medium-sized companies (theCompany’s customers) is decreasing. In fact, the total number ofcompanies as of June 2016 was approximately 3.59 million, which isabout 0.62 million smaller (-14.7%) compared to 2009.

(10) Small-sized company:
diff. definition by eachindustry, but essentially thesame as “small/mediumsized companies” in staff
size and sales[Figure 12] Change in the Number of Companies in Japan(ten thou. companies)

500

4.21 million
comapnies-0.62 million
companies
3.59 million
companies

400

300

Small-sized

423

410

305
378

366

367

200

334

325
Midsized

100

0

53

61

59

55

53

54

51

56

54

1999

2001

2004

2006

2009

2012

2014

2016

Largesized

1.1(year)(Ref) Data aggregated by the Small and Medium Enterprise Agency based on the “2016 Economic Census for Business
Activity” by the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade, and Industry

Meanwhile, facing aggravating necessities for manpower, operational
efficiency, and improved corporate financial performance, companies
and other corporate bodies have been working on rebuilding or
reinforcing their enterprise systems. Although the number ofsmall/medium-sized companies may continue to decrease, we predictthat the size of the relevant market will steadily increase as the demand
for software to streamline business operations will increase.
Also, according to the “WHITE PAPER Information andCommunications in Japan” by the Ministry of Internal Affairs andCommunications, the size of the packaged software market (excluding
game software, embedded software, etc.) in 2015 was approximately
Y1.1 trillion and its size has been gradually increasing in recent years.
We estimate Japan’s current market size for enterprise system software
specifically related to the Company’s business to be approximately
Y500 billion and for ERP to be approximately Y100 billion. Annual
growth rate is forecasted to be about 3% for the former and 10% for thelatter over the medium term. The cloud-based enterprise system
21/45
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
PCA (9629 TSE First Section)

w Stably growing
enterprise system
software market.
Transitioning fromon-premises to thecloud.
w Market potential for

cloud-based
enterprise system
software in Japan isstill large.

Issued: 12/20/2019
software market is expected to have an especially high annual growthrate of 20-30% over the long term, replacing a part of the packaged
software (on-premises) market. In fact, compared to the U.S. where theuse of cloud-based enterprise system software is several years ahead ofJapan, the penetration rate of such system in Japan is ½ to ⅓ of that of
the U.S. (ref: “WHITE PAPER Information and Communications inJapan” by the Ministry of Internal Affairs and Communications, etc.).
With regards to the software development method, outsourced
development continues to be popular in Japan. In fact, the share of
packaged software in Japan is about 12%, compared to 25% in the U.S.
(Figure 13). Therefore, the growth potential of the packaged software
market in Japan seems to be large (according to the year 2017 versionof the “WHITE PAPER,” the penetration rate of the cloud in Japan isapproximately 26% for “payroll / financial accounting / HR” and only
6-8% each for “production management / logistics management / store
management,” “purchasing,” and “sales on orders”).
[Figure 13] Software Ratio in Japan and the USA(Ref) Ministry of Internal Affairs and Communications: “Report on Current Status of Japan’s ICT”

◆ Comparison with Competitors
Figure 14 portrays an overview of the various positions and main
players in the industry, categorized by target customer zone. The players
in the industry are mostly being able to exist alongside one another bytaking strong positions in different niches, segregated by the size of thecompany/organization that are their users or by the operation targetedby the software.
[Figure 14] Customer Zones and Main Players of the Enterprise System Software Market(Ref) Excerpt from the financial results briefing material, partially edited by Alpha-Win Research Dept.

22/45
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
PCA (9629 TSE First Section)w Its key product, theaccounting software, isthird in the industry.

w OBC, MJS, Yayoi, and

OHKEN are its rivals.

w The Company

provides high-quality
products and services
at a reasonable price.

w In addition to OBC,
competing with
Money Forward andfreee with regards tothe cloud accounting
business

Issued: 12/20/2019
The Company has different rivals for each type of operation targeted byits software. In general, regarding business including its key accounting
software, its rivals among listed companies are thought to be ObicBusiness Consultants (OBC: 4733), directly, and Miroku Jyoho Service(MJS: 9928), indirectly. In particular, OBC is the greatest competitor,
since it has a similar product lineup and business model as the Company.
Among unlisted companies, Yayoi (subsidiary of ORIX), OHKEN(independent company), and OSK (subsidiary of OTSUKA
CORPORATION) are its direct competitors.
The Company is characterized by how it provides high-quality but
reasonably-priced products and services to its customers.
The accounting software market size is approximately Y200 billion.
The market is reaching maturity and its size has not largely changed. In
this market, the Company is estimated to be third from the top (about
10% of total market shares). The Company seems to have a similar levelof market share and be at a similar position with its payroll and HR
software. In the cloud accounting market, the two companies described
below join in as rivals. Both target small companies such as SMEs and
SOHOs, competing with the Company in certain areas.
Money Forward (TSE Mothers 3994)
・Providing cloud services such as household accounting application for
individuals and accounting software, etc., for companies
・Market capitalization of Y112.6 billion based on a stock price ofY5,080（closing price on 12/20）
・FY 11/2019: the company expects sales of Y7,350 million, net loss ofY2,570 million, and no dividend (P/S of 15.3; as a reference, P/S =market cap / sales)
freee (TSE Mothers 4478; became listed in December 17, 2019)
・ Providing ERP services for small businesses (cloud accounting
software)・Market capitalization of Y150.4 billion based on a stock price ofY3,220（closing price on 12/20）
・FY 06/2020: the company expects sales of Y6,941 million, net loss ofY3,135 million, and no dividend (P/S of 21.6)

w Regarding margins
and asset efficiency,
although leaving room
for improvement, eachof the margins hasbottomed out andbegun to increase due
to improved grossmargin and cost
reduction.

A comparison of the long-term transition in gross margin and operating
margin of the three major listed companies (the Company, OBC, and
MJS) is shown in Figures 15 and Figure 16 on page 24. Compared to
the Company, both margins are stable for OBC and MJS, presumably
due to the merit of scale (the sales of both OBC and MJS are about 2.6x
greater than the Company’s and their operating profits are about 6x and2.6x greater, respectively, based on this fiscal year’s company forecasts)
and the difference in efficiency and sales composition. Both companies
used to have a lower proportion of users signing a contract for the
maintenance support service but succeeded in raising this ratio,
resulting in a greater earning capacity. However, the Company’s profit
margins have also bottomed out in recent years, and the Company is
now aiming for a greater earning capacity.
23/45

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
PCA (9629 TSE First Section)

Issued: 12/20/2019
Similarly, the transition in the Company’s ROA and ROE in Figure 17
shows that the ratios have been sharply improving in recent years andthe Company seems to have room for improvement in earning capacity
as well as asset efficiency. (Actual results for FY 2019, in the order of
ROA and ROE: compared to 7.8% and 6.8% for PCA, 9.1% and 10.7%
for OBC and 21.7% and 16.1% for MJS.）[Figure 15] Long-Term Transition in the Gross Margin of Three Major Listed Companies (PCA, OBC, and MJS)
PCA

（％）

OBC

MJS

90.0
85.0

83.4

84.2

84.0

66.4

66.8

66.1

84.4

83.7

84.7

63.0

64.0

84.3

84.8

65.2

66.3

84.4

84.0

83.2

63.6

64.4

79.0

80.0
75.0

70.1
70.0
65.0

65.9

60.0

64.4

65.0

63.2

61.8

59.5

66.3

62.3
60.3

55.0

57.0

61.4

FY 2019

FY 2020
(CE )

54.5

53.5
51.0

50.0
45.0
40.0

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018[Figure 16] Long-Term Transition in the Operating Margin of Three Major Listed Companies (PCA, OBC, and MJS)
PCA

（％）

50.0

46.7

45.6

40.9

43.4

OBC
45.0

MJS

43.2

41.7

45.3

44.4

42.7

41.4

40.0

30.0

28.0

16.3

20.0

16.5

18.2

15.6
12.7

17.8
10.0

11.1

10.3

10.9

10.8

12.9

11.3

6.2

4.3

8.0

6.9

0.0

17.9
8.2
10.9

4.6

10.6

0.5

4.7
-2.2

-10.0

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020(CE )[Figure 17] Transition in the Company’s ROA and ROE
ROA

（％）

10.0

8.8

4.0

7.8

7.2

8.0
6.0

ROE

5.8
6.3

5.2

4.8
3.5

4.0

6.8

5.2

2.9

2.6

4.0

2.0

0.4

1.7
0.0

0.7

-1.0

3.9

1.5

-0.9

-2.0

-1.8

-4.0
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
＊ROA is the ratio of recurring profit to total assets.

(Ref) Figures 15-17 were prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecasts (CE) are from the companies’ business plans.

24/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019

7. First-Half Results and Full-Year Forecast
for This Fiscal Year
◆ Results for the Second Quarter (first half) of FY 2020
w This H1’s results:
sales grew for the
fourth consecutive
year and record-highsales and profit wereachieved. Sales
growth as well as the
improvement inmargins led to thelarge profit growth.

w Exceeded theCompany’s
undisclosed H1targets

Consolidated results for the first half of FY 2020 (hereinafter, “H1”)were marked by a significant growth in sales and profits: sales were
Y7,169 million (+45.8% YoY), operating profit was Y1,771 million(+625.8% YoY), recurring profit was Y1,789 million (+567.7% YoY),
and net profit attributable to owners of the parent was Y1,177 million(+500.8% YoY; hereinafter, “net profit”). As H1 results, sales increased
for the fourth consecutive year and hit a record high, and operating
profit increased for the fifth consecutive year and hit a record high forthe first time in 13 fiscal years since H1 FY 2007 (Figure 18).
Although the Company does not disclose its H1 forecast, it did comment
that, compared to its undisclosed and internal plan, sales were greaterby a little less than Y400 million (internal H1 target for sales: Y6.8
billion), gross profit was greater by about Y500 million, and operating
profit was greater by about Y800 million (internal H1 target: slightly
less than Y1 billion) (comments by the president during the financial
results briefing). In September, which is the end of H1, high demand
before the consumption tax revision especially affected the products(mostly accounting and sales management software) and the solutions,leading to a higher-than-expected sales growth. As a result, the profits
also increased, largely exceeding the internal plan.

[Figure 18] Financial Results for FY 2020 (H1)H1 Results
Unit: million yen

Consolidated Sales

Sales Category

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Profit
Gross Margin (%)
SG&A Expenses
SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)
Net Profit
Net Margin (%)

H1 FY 2019
Apr-Sept 2018
4,915
813
207
1,553
1,129
1,214

H1 FY 2020
Apr-Sept 2019
7,168
1,842
219
1,698
1,568
1,841

2,714
55.2
2,470
50.3
244
5.0
195
4.0

4,343
60.6
2,572
35.9
1,772
24.7
1,177
16.4

(unit: million yen, %)% Change
Difference% of Total Sales Growth % of Total Sales%%
YoY: %
YoY: million yen
45.8
2,253
100.0
100.0
126.7
1,029
45.7
25.7
5.6
12
0.5
3.1
9.4
145
6.4
23.7
38.9
439
19.5
21.9
51.6
627
27.8
25.7
60.0
4.1
625.8
500.8

1,629
5.4
102
-14.4
1,527
19.7
982
12.4

-

-

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary. (Note) “Other operating revenue” is thesame as the “solutions” business. Sales for each category are based on the new standards.

w With the high demandbrought by two major
events, all sales
categories experienced
sales growth.
Products, solutions,and the cloud
especially grew.

Of the total sales growth of Y2,253 million (YoY), sales growth for eachsales category in decreasing order was as follows: Y1,029 million forthe products (% of total sales growth: approx. 46%), Y626 million forthe solutions (28%), Y439 million for the cloud (20%), Y145 million
for the maintenance (6%), and Y12 million for the goods (1%). Sales
increased in all categories.
In H1 of this fiscal year, there was a high demand due to two events(early demand for software version upgrades in response to the revisionof the consumption tax rate and for software replacements in responseto the termination of support for Windows 7) that amounted to a little
less than Y1 billion (value estimated by Company; last H1, there was
25/45

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.

w 足元の PCA クラウドの利用法人数も順調に増加。

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

w Corporate users of
PCA Cloud aresteadily increasing.
Over 13,000 users. A
high annual sales
growth rate of 20-30%
maintained.
w From H1 FY 2017 to
H1 FY 2019, sales havebeen growing
continuously at a highrate of about 20-30%,
from +20.1% →+29.6% → +38.9%.

Issued: 12/20/2019
zero event-driven high demand). This demand greatly contributed tobusiness performance. In particular, sales of the products (on-premises)
and the solutions were strong; sales of the products increased by 127%,
mainly for accounting and sales management software, and sales of thesolutions, which consist of implementation support fee linked to productsales and the purchase and sale of other companies' products, increasedby 52%. Meanwhile, although the maintenance category’s sales growthrate had been in the low single-digit range, its sales increased by about
9% due to strong product sales and an increase in the proportion of users
subscribing to the maintenance service (new purchases and upgrades
come with a maintenance contract in 100% of cases).
The number of corporate users of the PCA Cloud reached 10,000 on
1/11/2018 and then further increased to 11,331 at the end of September
2018, to 12,313 at the end of March 2019 (compared to six months ago:
+982), and to 13,343 at the end of September 2019 (compared to six
months ago: +1,030). Overall, the number of corporate users increased
by 2,012 companies in the last 12 months (Figure 6 shown previously
on page 12). On a simple average, the number of corporate users
increased at a net rate of about 168 companies per month. The positive
trend is maintained in H2, with users increasing at a net rate of about
170 companies per month. Of the total number of new contracts,
approximately 40% are with new customers (the proportion is the same
as before).
As a result, the sales of the cloud increased from Y871 million (YoY:+155 million yen or +20.1%) in H1 of the fiscal year before the previous(FY 2017) → Y1,129 million (YoY: +258 million yen or +29.6%) in
the previous fiscal year’s H1 → Y1,568 million (YoY: +439 million
yen or +38.9%) in H1 of this fiscal year (FY 2019). With the expansionof business, the amount and rate of sales growth are increasing.
Sales of the Company’s subscription-based businesses (combined salesof the maintenance service and the cloud), which are the Company's key
performance indicator, accounted for 45.6% of the total sales during thisH1, a lower proportion than what it had once been in the past. This isbecause customers who still prefer to use stand-alone softwarepurchased on-premises or other companies' products ahead of schedulein response to version upgrade campaigns, etc., before the rise in the
consumption tax rate. Consequently, sales of the products and thesolutions grew more than the cloud (Figure 19 on page 27).

w The labor
management system
also contributed toboth sales and profit.

The labor management system of the subsidiary Xronos also made asignificant contribution, thanks in part to the work-style reform. Salesof the product version grew by Y220 million and sales of the cloudversion grew by Y141 million, totaling a sales growth of Y361 million.
In sum, the subsidiary contributed to about 16% to the overall sales
growth (Figure 20 on page 27).

26/45
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
PCA (9629 TSE First Section)[Figure 19] Transition in H1 Sales bySales Category (unit: million yen, %)Maintenance(million yen)

Solutions

Goods

7,000

Products

YoY
Change
7,169

1,842

6,000
5,000

4,473

4,000

823
216

3,000

1,011

2,000

% of Total Sales

145.8%

54.4%

45.6%

Subscription-BasedCloud

One-Time-Fee-Based(Ref) Prepared by Alpha-Win Research
Dept. from the Company’s H1 FY 2020
financial results briefing materials.
Sales for each category are based on the
new standards.

Issued: 12/20/2019

226.7%

4,917

219

105.6%

812
207

1,841

151.6%

1,698

109.4%

1,214

1,553

1,550

1,000

1,568

1,129

871

138.9%

0
2017

2018

Apr-Sept

2019

Apr-Sept

Apr-Sept(million yen)

[Figure 20] Actual Sales in FY 2020
(this H1) (unit: million yen)

8,000

Increase

7,500

626

(Ref) Prepared by Alpha-Win Research 7,000
Dept. from the Company’s H1 FY 2020
6,500
financial results briefing materials

439
1,029

6,000

11

145

5,500
5,000

7,169

PCA
+248
Xronos +141

4,917
PCA

4,500

Xronos

Implementation
support +179
Other +447

+826
+220

4,000
H1 FY 2019w Last fiscal year, theprofit margins
largely improved.
(11) PCA Hyper: a newsoftware for mid-tiercompanies as a successor toDream21. Targets theapprox. 90,000 companies
in Japan with sales of 1 to 10
billion yen, less than orequal to 1,000 employees,
and less than 10 subsidiaries
in the corporate group. A
superior version of the DX
Series. Its unique features
are how the user can flexibly
select between the onpremises and the cloudaccording to their stage of
growth, make flexible
linkage with other systems
using API, and streamline
data management for theentire corporate group(consolidated accounting).

Products

Goods

Main tenance

Cloud

Solutions

H1 FY 2020

Regarding profit, gross profit in H1 of this fiscal year was Y4,343
million, an increase of 60% or Y1,629 million YoY. The gross margin
improved 5.4 points from 55.2% in H1 of the previous fiscal year to60.6% in H1 of this fiscal year due to the sales growth as well as the
reduction in software amortization and maintenance costs thatcompensated for the rise in the cost of purchase. Meanwhile, SG&A
expenses increased only slightly, by Y102 million or about 4% YoY,
and the SG&A expenses ratio improved by 14.4 points from 50.3% to35.9%.
As a result, operating profit increased significantly by Y1,527 million
or 625.8% YoY and operating margin also improved dramatically by
19.7 points from 5.0% to 24.7%. Figure 21 on page 28 shows the factors
contributing to the increase or decrease in consolidated operating profit.
Since the Company is based on a business model with a high marginal
profit ratio, the sales growth directly contributed to profit growth withsuccessful cost control. Since investment in software development and
R&D for new software such as the Hyper series11 have settled for now,
they have not caused large increases in cost.
With no significant non-operating profit/loss or extraordinary
profit/loss, recurring profit and net profit both increased by more than
5x. Although profit for each category is not disclosed, sales growth of
the highly profitable products and cloud businesses are predicted tohave largely contributed to the increase in profit.
27/45

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
PCA (9629 TSE First Section)[Figure 21] Factors that
Increased/Decreased Operating
Profit in FY 2020 (this H1)Issued: 12/20/2019
Sales
3,000

Operating
ProfitSG&A Expenses

Increase

134

2,252

2,500

(Ref) Prepared by AlphaWin Research Dept. fromthe Company’s H1 FY 2020
financial results briefing
materials

Cost of Sales(million yen)

2,000

Decrease

-565

64

-192

1,771

-113

-52

1,500
Cost of purchase
Cost of cloud
Cost of maintenanceRoyalty payment

1,000

500

244

-478
-6
-56
-24

Profit increased by Y1,527 million (725.8%) YoY!

0
A 2019H1 FY

AIncreased
sales

A
Decreased
softwareamortization

A
Increased cost ofpurchase (royalty
payment, etc.)

A
MaintenanceexpenseA
Increased HR
expenseA R&D
Increased
expenseA
Other SG&A
expensesA
H1 FY 2020

Examining the sales for each quarter (Figure 22), we can see that thesales in the first quarter (April-June 2019: Q1) were Y3,073 million, a
31% YoY growth, while sales in the second quarter (July-September
2019: Q2) were Y 4,095 million, a +59% YoY growth; sales growth isaccelerating. Regarding the sales breakdown by sales category, the sales
growth rates of the cloud business in Q1 and Q2 were the same, at about+40% YoY.
On the other hand, the sales of the products increased sharply fromY652 million in Q1 to Y1,190 million in Q2. Similarly, the sales of thesolutions increased significantly from Y688 million to Y1,153 million.
Also, comparing Q1 and Q2, the gross margins were the same at about
60% and the absolute amounts of SG&A expenses were also almost thesame at just under Y1.3 billion. As a result, operating margin improved
significantly from 19.1% in Q1 to 28.9% in Q2 and net profit doubled
from Y364 million to Y842 million.
[Figure 22] Financial Results for Q1 and Q2 of FY 2020
Q1 Results
Unit: million yen

Consolidated Sales
Sales Category
Gross Profit
SG&A Expenses
Operating Profit
Net Profit

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue
Gross Margin (%)
SG&A Expenses Ratio (%)
Operating Margin (%)
Net Margin (%)
Q2 Results

Unit: million yen

Consolidated Sales

Sales Category

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Profit
Gross Margin (%)
SG&A Expenses
SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)
Net Profit
Net Margin (%)

Q1 FY 2019
Apr-June 2018
2,346
394
107
788
544
511
1,287
54.9
1,229
52.4
57
2.4
34
1.4
Q2 FY 2019
July-Sept 2018
2,569
419
100
765
585
704

Q1 FY 2020
Apr-June 2019
3,073
652
102
865
764
688
1,868
60.8
1,281
41.7
587
19.1
364
11.8
Q2 FY 2020
July-Sept 2018
4,095
1,190
117
833
804
1,153

% Change
Difference% of Total Sales Growth % of Total Sales
YoY: %
YoY: million yen
%
%
31.0
727
100.0
100.0
65.3
258
35.5
21.2
-4.6
-5
-0.7
3.3
9.8
77
10.6
28.1
40.3
220
30.3
24.9
34.7
177
24.4
22.4
45.1
581
5.9
4.2
52
-10.7
917.5
530
16.7
945.3
330
10.4
% Change
Difference% of Total Sales Growth % of Total Sales
YoY: %
YoY: million yen
%
%
59.4
1,526
100.0
100.0
184.3
771
50.6
29.1
16.5
17
1.1
2.9
8.9
68
4.5
20.3
37.4
219
14.4
19.6
63.9
449
29.4
28.2

1,427
55.6
1,241
48.3

2,475
60.4
1,291
31.5

73.4

187
7.3
161.4
6.3

1,185
28.9
842
20.6

533.2

4.0

421.6

1,048
4.9
50
-16.8

-

-

997
21.6
681
14.3

-

-

(Ref) Prepared by Alpha-Win Research Dept. based on the FY 2020 summary of quarterly results. Sales of each sales category are based on the new standards.

28/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019◆ PCA’s Financial Forecast for FY 2020 (this fiscal year)
The Company revised up its forecast for sales and each of the profits in
FY 2020 (this fiscal year) upon considering the H1 results and the H2
situation.
w Event-driven highdemand contributed to
H1 results. This FY, theCompany expects
increasing sales andprofits for the fifth
fiscal year. On a fullyear basis, too, recordhigh sales and profits
are expected.

Summary of Full-Year Forecast
Upward revisions were made as follows, in the order of previous
forecast → new forecast for this fiscal year: sales of Y12,783 million(+11.8% YoY) → Y13,404 million (+17.2% YoY; +4.9% revision),
operating profit of Y1,478 million (+18.5% YoY) → Y2,405 million(+92.7% YoY; +62.7% revision), recurring profit of Y1,499 million(+17.4% YoY) → Y2,435 million (+90.7% YoY; +62.4% revision), andnet profit of Y976 million (+7.7% YoY) → Y1,572 million (+73.5%
YoY; +61.1% revision). The Company expects an extremely high sales
and profit growth year-on-year (Figure 23).
On a full-year basis, sales are expected to reach a record high for thesecond consecutive year and operating, recurring and net profit are
expected to reach their record highs (the last record highs were Y1,747
million in FY 2006, Y1,783 million in FY 2006, and Y937 million in
FY 2000, respectively).

[Figure 23] Initial and Revised Company Forecast for FY 2020 (this fiscal year) (unit: million yen)
FY 2020 Consolidated
Sales
Operating Profit(% over sales)

Recurring Profit(% over sales)

Net Profit(% over sales)

Initial Company % Change
Forecast
YoY

12,783
1,478
11.6
1,499
11.7
976
7.6

11.8
18.5
17.4
7.7
-

New Company
Forecast

Difference from
Initial Forecast% Diff. from
Initial Forecast% Change YoY
Diff. from Last Year (%)

13,404
2,405
17.9
2,435
18.2
1,572
11.7

621
927
6.4
936
6.4
596
4.1

4.9%
62.7%
-62.4%
61.1%
-

17.2
92.7
7.0
90.7
7.0
73.5
3.8

(Ref) Prepared by Alpha-Win Research Dept. based on an excerpt from the Company’s FY 2020 financial results briefing
materials

w In H2, fallback from theevent-driven highdemand will begin,causing a significant
decline in sales andprofits compared to theprevious year’s H2 andthis year’s H1.

H2 Forecast
The Company's forecast for sales in H2 is based on estimates orassumptions as shown in Figure 24 on page 30 and Figure 25 on page
31. Sales are expected to decrease by Y287 million (about -4% YoY)
compared to H2 of the previous year when there was an event-driven
high demand of a little more than Y900 million. The expected sales are
Y932 million or 13% lower than this H1’s results.
Regarding the expected increase or decrease in sales for each sales
category, due to the anticipated fallback from the high demand related
to consumption tax, the Company made a stern forecast that the sales ofthe products (on-premises) and the solutions (implementation support,etc.) will decline by Y538 million (-32% compared to the previous
year’s H2; the same applies below) and Y325 million (-20%),
respectively (Figure 24 on page 30). On the other hand, the cloud andthe maintenance businesses are expected to continue to perform well,with sales up by Y368 million (+29%) and Y219 million (+14%),respectively. The goods business’s sales are expected to decline by onlya slight amount.

29/45
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
PCA (9629 TSE First Section)
w Expecting further

improvement inmargins, but SG&A
expenses may also
sharply rise.

Issued: 12/20/2019
Factors that are expected to contribute to an increase or decrease in H2
consolidated operating profit are shown in Figure 26 on page 31. The
effect of sales growth on profit is estimated to be large. The Company
believes that the gross margin will improve (from 58.3% in H1 of theprevious year → 62.4% in H2 of the current year) due to reductions insoftware amortization costs, cost of purchasing, maintenance costs, etc.
However, due to the increase in personnel expenses and other SG&A
expenses (includes the assumption that advertising expense, etc., willrise by Y230 million), operating profit is expected to drop sharply by
Y361 million (-36%) compared to the previous year’s H2.
As for non-operating profit and loss, a profit of Y12 million is expected.
Recurring profit is estimated to decrease by 35% YoY, from Y998
million to Y645 million. At this stage, the Company does not expect topost any significant extraordinary profit or loss. Net profit is expected
to decrease by 44% YoY from Y700 million to Y394 million.

w Event-driven highdemand in H2 will belimited, at a few
hundred million yen.

w Contribution of theHyper series will begin
next fiscal year.

w Performance of thelabor management
software is strong. Its
cloud version is also
growing.

The event-driven high demand seen from last year’s H2 to this year’s
H1 is expected to mostly cease by H2 – its impact will be limited.
In addition, as a successor to the ERP software Dream21 from which
the Company has decided to withdraw, the Company has been
incrementally releasing the new cloud-related product series Hyper(PCA Hyper) for mid-tier companies and preparing for sales expansion.
The Company launched the accounting and fixed assets software in
February 2019 and the payroll and labor management software in Julyof the same year. In February 2020, it plans to release two options, uponwhich all the software releases will be complete. However, since theCompany will be busy this fiscal year in responding to the event-driven
high demand, the contribution of the new software to the results will belimited – full-scale sales expansion is expected to start next fiscal year.
Amidst the work-style reform, there are still many SMEs who are notusing labor management software, meaning that the potential demand islarge. Xronos has taken in this demand; orders for both the on-premises
version and the cloud version (service name: X’sion) of the labor
management software are strong. The Company expects its sales togrow at a double-digit rate YoY (we expect the growth to be about 10%).

[Figure 24] Semi-Annual Transition in Results and Company Forecast for the Previous and the Current FY (unit: million yen)Half Year

Consolidated

Sales
Gross Profit(% over sales)

SG&A Expenses(% over sales)

Operating Profit(% over sales)

Recurring Profit(% over sales)

Net Profit(% over sales)

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue

Total

H1 FY 2019
AR
4,917
2,714
55.2%
2,470
50.2%
244
5.0%
268
5.5%
196
4.0%
813
208
1,553
1,129
1,214
4,917

H2 FY 2019
AR
6,521
3,808
58.3%
2,814
43.1%
994
15.2%
998
15.3%
700
10.7%
1,703
356
1,572
1,274
1,616
6,520

H1 FY 2020
H2 FY 2020 Diff. from Last
AR
CE
H2
7,169
6,234
-287
4,343
3,893
85
60.6%
62.4%
4.1%
2,571
3,259
445
35.9%
52.4%
9.3%
1,771
633
-361
24.7%
9.9%
-5.3%
1,789
645
-353
25.0%
10.1%
-5.2%
1,205
394
-306
16.4%
6.2%
-4.5%
1,842
1,165
-538
219
347
-9
1,698
1,791
219
1,568
1,642
368
1,841
1,291
-325
7,168
6,236
-284

% Diff. from
Last H2

-4.4%
2.2%
15.8%
-36.3%-35.4%-43.7%

-32%
-2%
14%
29%
-20%
-4%

Diff from This
H1
-935
-450
1.8%
688
16.5%
-1,138-14.8%-1,144-14.9%-811-10.2%
-677
128
93
74
-550
-932

% Diff from
This H1-13.0%-10.4%
26.8%-64.3%-63.9%-67.3%

-37%
58%
5%
5%
-30%
-13%

(Ref) Prepared by Alpha-Win Research Dept. from the financial results briefing materials. AR: actual result. CE: the Company’s forecast.
Sales for each category are based on the new standards.

30/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019[Figure 25] Factors that Are Expected to Increase/Decrease
This H2’s Sales (company forecast)[Figure 26] Factors that Are Expected to Increase/Decrease
This H2’s Operating Profit (company forecast)(million yen)

7,000

6,600

(million yen)

Increase

1,200

Decrease

6,800

Increase

368

6,521

SG&A Expenses

Decrease
45

1,100

174

1,004

33

1,000

6,400

6,234

218
6,200
6,000

-147

151

900

-324

800

-540

-8

5,800

700

5,600

-287

633
-341

600
Operating Cost

5,400
500

Ads, etc. -230

5,200
400

FYA2019
H2 Result

5,000
FY 2019
H2 Result

Products

Goods

Main tenance

Cloud

Solutions

FY 2020

DecreasedAsales

H2 PlanDecreasedA
softwareamortization

Decreased
cost ofA
purchase (royalty
payment, etc.)

DecreasedA
A
Increased
maintenance HR expense
expenseA
Increased
R&D
expense

Other
A
SG&A
expensesFY A2020
H2 Plan(Ref) Prepared by Alpha-Win Research Dept. from the Company’s Q2 FY 2020 financial results briefing materials

Full-Year Forecast
The factors that are expected to contribute to sales growth for the full
fiscal year are shown in Figure 27. Sales are expected to increase in all
five categories. Over the full fiscal year, contribution to sales are
predicted to the largest for the cloud (Y807 million), accounting forabout 41% of the total. Next, the products (Y489 million) will accountfor about 25%, the maintenance (Y364 million) will account for about
19%, the solutions (Y364 million) will be about 15%, and the sales of
the goods are expected to stay about the same.
As for the factors expected to contribute to an increase or decrease inoperating profit on a full-year basis, sales growth is by far the mostimportant factor, expected to fully absorb the rise in the cost ofpurchasing, personnel costs, and other SG&A expenses and lead to asignificant increase in profit (Figure 28).
[Figure 27] Factors that Are Expected to Increase/Decrease
Sales in FY 2020 (this full FY) (company forecast)[Figure 28] Factors that Are Expected to Increase/Decrease
Operating Profit in FY 2020 (this full FY) (company forecast)
Increase(million yen)

4,000

Increase

Decrease

302

13,50013,4043,000

12,500

2,500

364
489

12,000Operating
ProfitSG&A Expenses

286

3,500

13,000

Cost of Sales

Sales

1,965

807

11,500Decrease(million yen)

14,000

-390

98

-147
-260

2,405
-394

3

2,000

11,439

1,500

1,248

1,000

11,000500

10,5000

10,000期
2020/3
FY
2019
Result製品

Products

商品

Goods

保守

Maintenance

クラウド
Cloud

ソリューション等

Solutions, etc.

期
2020/3
FY 2020

ResultFY A2019
ResultA
Increasein salesA
Decreaseinsoftwareamortization

A in
Increasecost ofpurchase(royalty
payment,
etc.)

A
IncreaseinmaintenanceexpenseA
Increasein HR
expenseA
Decreasein
R&D
expense

Other
A
SG&A
expenses(Ref) Prepared by Alpha-Win Research Dept. from the Company’s H1 FY 2020 financial results briefing materials

31/45This 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.

FY A2020
PlanAlpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 12/20/2019◆ Alpha-Win Research Dept.’s Financial Forecast for FY
2020 (this fiscal year)
w We reviewed thisFY’s forecast andrevised both sales
and profits upward.

w The double highdemand from theconsumption tax andW7 has mostly ended
but there seems to be
no slowdown ingrowth at this point.
H2 assumptions forsales and costs areboth on theconservative side, so
the actual results may
be even higher.

We updated the financial forecast for the current fiscal year based on
the H1 results and the current situation (Figure 29 on page 33).
Although the Company has revised up its forecast for the current fiscal
year, we believe that the Company’s new predictions for sales andprofits are still on the conservative side and that the actual results could
be even higher. Compared to the Company’s new forecast, our new
forecast for sales are greater by about Y200 million (+1.5% revision),
operating profit is about Y300 million larger (+12% revision), and net
profit is higher by a little less than Y200 million (+11% revision). In
either forecast, record-high sales and profits are expected with a highdegree of confidence.
Compared to H1 when there was an event-driven high demand of a little
less than Y1 billion (according to the Company's estimate), in H2, theCompany expects that sales will decline in a fallback from the demandby Y935 million (about -13%) and operating profit will decrease by
Y1,138 million (about -64%). Compared to H2 of the pervious fiscal
year, sales are predicted to be about 4% lower and operating profit isexpected to decline by about 36%. It cannot be denied that H2 sales andprofits will be affected by the level of demand related to the switchingfrom Windows 7 (W7), which will reach its peak by around January
2020, and by the number of orders for the products, the solutions, etc.,
following the demand, both of which are somewhat uncertain at thispoint. However, in October and November, there seemed to be no large
decline in the growth rate of key businesses such as the products, thecloud, the solutions, etc., and sales appeared to be firm.
Also, as mentioned earlier (page 29), the Company had made a sternassumption that, by sales category, H2 sales of the products and thesolutions will fall by more than 30% each from H1. Meanwhile, its
forecasted sales growth of the cloud and the maintenance service is 5%
compared to H1, a conservative assumption.
In contrast to these assumptions, the cloud and the labor management
software are continuing to be strong with regards to contracts. The
products’ version upgrades and the solutions business are also notdeclining as drastically as the Company had expected. Although the HR
capacity is somewhat of a bottleneck to the implementation support andmaintenance services, the order backlog carried over into H2 ensuresstrong sales.
In addition, the Company expects SG&A expenses to increasesignificantly due to advertising expenses remaining from H1, personnel
expenses, and other expenses (SG&A expenses growth rate is predicted
to be +16% compared to the previous H2 and +27% compared to thisH1). This seems to be an overestimate, though.
Therefore, forecasts for both sales and profit in the current fiscal year’s
H2 seem to be on the conservative side. The full-year results also seemto have room for more growth.

32/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019[Figure 29] This Fiscal Year’s New Financial Forecast by the Company and Alpha-Win
Research Department (unit: million yen)
Consolidated(unit: million yen)

Sales
Gross Profit
Gross Margin

SG&A Expenses
SG&A expenses
ratio

Operating Profit
O.P. Margin

Recurring Profit
R.P. Margin
Net Profit Attributable to Ownersof the Parent

N.P. Margin
Annual Dividend per Share

Alpha-Win's Initial vsAlpha-Win's New Forecast vs.
FY 2020
New Forecast
New Company Forecast
Diff. in
New Company
New Forecast% Diff.
Diff. in Amount% Diff.
AmountForecast

FY 2020 Alpha-Win
InitialForecast
11,000
6,300
57.3%
5,100

13,600
7,800
57.4%
5,100

2,600
1,500
0.1%
0

23.6%
112.4%
ー
0.0%

13,404
7,331
57.3%
5,852

196
469
0.1%
-752

1.5%
6.4%
ー
-12.9%

46.4%

37.5%

-8.9%

ー

45.8%

-8.3%

ー

1,200
10.9%
1,220
11.1%

2,700
19.9%
2,730
20.1%

1,500
8.9%
1,510
9.0%

125.0%
ー
123.8%
ー

2,405
11.6%
2,435
11.7%

295
8.3%
295
8.4%

12.3%
ー
12.1%
ー

800

1,750

950

118.8%

1,572

178

11.3%

7.3%
31

12.9%
41

5.6%
10

ー
-

7.6%
31

5.3%
10

ー
ー

(Ref) Prepared by Alpha-Win Research Dept. CE is the Company’s estimate/forecast. E is Alpha-Win’s estimate/forecast.

33/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019

8．Growth Strategy◆ Management Indicator Targets and Areas of Focus
In 2012, the Company announced its group’s management indicatortargets as Y20 billion in sales (as a reference, the actual result in FY
2019 was Y11.4 billion), 2.5% in DOE (FY 2019 actual: 1.8%), and80,000 corporate customers for the cloud (a little over 13,000 as of theend of September 2019), and has been developing its business in linewith this plan. To achieve these targets, five areas of focus have beenchosen: 1) become even greater as No. 1 in the cloud-based enterprisesystem software market, 2) enhance the solutions to provide more thansimple functionality, 3) further advance the technology of PCA Cloud,4) pursue new services, and 5) actively conduct M&As.

w Management
indicator targets are
sales, DOE, and thenumber of cloudusers

w Five areas of focus◆ New Medium-to-Long-Term Vision PCA Vision 2030:
1st Stage – Medium-Term Business Plan to 2021
In June 2018, Fumiaki Sato, who was previously executive vicepresident, was promoted to president and created a new operating
framework for the Company. A little before this event, the core concept“PCA4.0” of the medium-to-long-term vision PCA Vision 2030 wasannounced in May 2018. The concept is summarized in Figure 30 and
Figure 31 on page 35. The Vision was created in line with the fact that
the Company will reach a milestone in the year 2030 as its 50th
anniversary. Then, as the next and further step, the Company announced
in November 2018 the PCA Vision 2030: 1st Stage – Medium-TermBusiness Plan to 2021.

w Announced PCA
Vision 2030: 1st Stage –Medium-TermBusiness Plan to 2021
in November 2018

Specifically, Company has categorized the 50 years from 1980 to 2030
into four phases of business development as follows: 1980 to 1998 as“PCA1.0,” the period of transition from small business computer to PC;
1998 to 2008 as “PCA2.0,” the period of flourishment of the internet
and client servers; 2008 to 2018 as “PCA3.0,” the period oftransformation of internet into infrastructure and popularization of thecloud; and 2018 to 2030 as “PCA4.0.”[Figure 30] The New Medium-to-Long-Term Vision PCA Vision 2030                            

  

w 当調査部では、中期の年間利益成長率を5~8％予想。

                          !  "
     
        
Target period of current mediumterm business plan

2018

2019

2020

2022

2023

 



 
2030

2029
2028

2025

2026

2027

2024

2021

⇒In the current medium-term plan, we are focused on strengthening the earnings base andmanagement base toward the realization of our medium- to long-term vision.

(Ref) Excerpt from the Company’s financial results briefing material(Note) The years in this figure are such that 2019 stands for FY 2020 (the same applies to all years in this figure).

34/45
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
PCA (9629 TSE First Section)
Issued: 12/20/2019[Figure 31] Overview of the Core Concept
PCA4.0 [Becoming a Problem-Solving Service Provider]“PCA4.0” of the Medium-to-Long-Term
1. Service-oriented creation of products
Vision2. Sales partnership enriched by solution proposals(Ref) Prepared by Alpha-Win Research
Dept. based on the Company’s FY 2019and H1 FY 2020 financial results briefing
materials

3. Strengthening digital direct marketing
4. Enhancing customer contact and relationship
5. Implementation of strategic recruitment, training, and evaluation programs
6. Development of flexible organizational and operational systems

In the medium-term business plan, the Company described its mediumto-long-term vision that it will continue to be a company that contributes
to society as a “management-supporting company” that supports thesmooth management and operation of other companies mainly byproviding enterprise system software that realizes high-levelautomatization.

w Reinforcement of
product creation,
adoption of theannual plan system,
and reform of the HR
system were added as
key measures.

In the recently annouced PCA Vision 2030: 1st Stage – Medium-TermBusiness Plan (FY 2020 – FY 2022), the Company stated that its basic
policy over the medium term is to “conduct structural reforms anddevelop business platforms so that business will continue to exist anddevelop stably over the long term.” Aiming to become a solutionproviding service providor, the Company’s plan for the medium term is
to focus on creating a firm earnings base and management system forthe realization of its medium-to-long-term vision.
The basic strategies based on the basic policy, as well as theirsummaries and measures, are described below (Figure 32). The
medium-term business plan has not been changed, but in comparison
with the past version, reinforcement of product creation has been added
as a basic strategy (IV). In addition, in III, adoption of the annual plansystem (1) and reform of the human resources system (4) were added as
key measures (shown in red in Figure 32). Also, an execution roadmap
has been set for each measure, making their schedules more specific.

[Figure 32] Basic Strategies and Their Summaries and Measures[PCA Vision 2030: 1st stage – Medium-Term Business Plan to 2021]
Basic Strategy

Summary and Measures

I. Build the earnings base for the main businesses

Basic Strategy

Summary and Measures

III. Strengthen the management system to become a highly profitable company

Will work on PCA Cloud, for which it has a rich productCreate a culture or a system that promotes the autonomous
advancement of organization by reflecting the company-widelineup and over ten years' worth of business know-how. Will
policies and key measures in each department's policies andsecure a firm position in the market and build a strong 1. Adopt the annual businessplans each fiscal year and adopting a management system thatearnings base as one of its main businesses by focusing onplan system (reinforce coordination is based on the PDCA (a method to manage and improve
1. Strengthen and increase theimproving brand power, finding new Web-API partners,
sales of PCA Cloudbusiness processes, etc., by repeatedly conducting the four
strengthening
servicefunctions,andstrengthening with medium-term plan)steps of Plan → Do → Check → Act and continuously
cooperation with specialists (professionals) in accouting
improving and optimizing the processes).
offices, certified social insurance and labor consultant offices,
etc.
Strengthen the profit management system so that it supports
2. Strengthen the profit
strategic decision-making through autonomous efforts by eachEngage in strengthening the on-premises business (sales andinternal organizational unit to improve profit, products andmanagement system to support
maintenance of the on-premises) by reviewing the products,
services adapted to changes in the business environment,
strategic decision-making
2. Strengthen the on-premises
service system, etc., based on the users' needs. Will make areassessment of business asset allocation, etc.
transition from the on-premises to the subscription-based
business
In addition to conventional management indicators, createmodel, as well as improving the maintenance contract repeat3.
Adpot
performance
evaluationandadopt a performance management indicator that would
rate and operation productivity.
indicators that reflect profitability help improve profitability under the Company's businessmodel as the Company tries to strengthen and shift to theimprovement
II. Create new business opportunities
subscription-based business model.
In an aim to create a new earnings base for the future. Will
Removebarriers between divisions, create a corporate culture
accelerate its progress with creating new businessthat encourages taking on challenges toward common goals,
opportunities by establishing a division (called "General
4. Reform the HR system
1. Find the "seeds" of new
and restructure the organization into one that fosters andInnovation Office" for now; established in Jan. 2019) tasked
values members who can think and act on their own.
products and businesses
with the role to find the seeds of new products and businesses
related to new technologies such as AI, big data, RPA, and
IV. Strengthen product creation
FinTech.
Cooperate with the General Innnovation Office in creating thefoundation and system to encourage innovation. Reinforce
With the new Hyper Series, renew efforts to develop the mid1. Restore product development
internal and external cooperation to improve our insight into
tier company market, which is an attractive market since it
capacity (tradition and innovation) and sensitivity toward changes in the external environment
2. Renew efforts to develop theencompasses the upper zone of the Company's major
mid-tier company market
related to our products and services.
customers and has the capacity to bear large system
Give more authority to the group leader assigned to each
investment costs.
2. Reform the organizationalgroup of products in order to enhance agility. Reform thestructure and managemet policy of organizational structure for R&D by securing research(Ref) Prepared by Alpha-Win Research Dept. based on excerpts from thebudgets and development capacity to create service-oriented
the development division
Company’s FY 2019 and H1 FY 2020 financial results briefing materials
products.

w 当調査部では、中期の年間利益成長率を5~8％予想。

35/45
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
PCA (9629 TSE First Section)
Issued: 12/20/2019
Also,
the
Companyhasannouced
newnumerical
targets for FY 2022,
w No changes to the
the
final
fiscalyearofthemedium-term
plan
(the
fiscal year ended
medium-term plan,
March
31,
2022),
as
shown
below
(targets
for
each
year
have not been
but the final year’s
disclosed;
pleaserefer
toFigures
33,
34,
and
35).
targets are expected to
be exceeded by a large
amount during thisHowever, all numerical targets for the final year or FY 2022 arefiscal year. Revision
expected to be exceeded by a large amount during this fiscal year.
to the plan is
Therefore, when the Company announces this year’s full-year results
scheduled at the(around May of next year), it will also likely announce (upward)
beginning of next
revisions for the targets and additional, specific strategies and measures.
fiscal year.
[Figure 33] Targets of the Medium-Term Business Plan
Target Items of the Medium-Term PlanFY 2022 Target

FY 2020 New Target

FY 2020 Initial Target

FY 2019 Results≥Y11.5 billY13.404 billion

Y12.783 billY11.439 bill

Achieve Y6 billY6.738 billion

Y6.211 billY5.577 bill・Consolidated Operating Profit≥Y1.5 billY2.405 billion

Y1.478 billY1.248 bill・Consolidated Operating Margin≥10%

17.94%

11.60%

10.90%

・Consolidated Sales
Of which are sales from subscription-based businesses(maintenance & cloud)(Ref) Figures 33–35 were prepared by Alpha-Win Research Dept. based on the financial results briefing materials. Targets/estimates (E) arethose announced by the Company.

[Figure 34] Financial Results Forecast in the Medium-Term Business Plan (consolidated)(million yen)

Sales (left axis)

O.P. (left axis)

Margin (right axis)

13,50018.0%

12,00016.0%

10,500

14.0%
10+ %

9,000
7,500

12.0%
10.0%

w 当調査部では、中期の年間利益成長率を 6,000
4,500
5~8％予想。

8.0%
6.0%

3,000

Y1.5+
billion

1,500
0

4.0%
2.0%
0.0%

FY 2019

FY 2020 E

FY 2021 E

FY 2022 E[Figure 35] Sales Forecast for the Subscription-Based Businesses(million yen)

Total subscription-based sales
Main tenance fee (on-premises)
Cloud

8,000

Y6
billion
6,000

4,000

2,000

0
FY 2019

FY 2020 E

FY 2021 E

FY 2022 E

36/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019◆Alpha-Win Research Dept.’s Financial Results Forecast
for the Medium Term

w We revised our

We revised our medium-term financial forecast, including this fiscal
year’s forecast, upon considering the H1 results (Figure 36).

medium-term forecast
for next fiscal year
and onward.
Assumptions for sales
and costs werereviewed and upwardrevision was made to
profit.

We made upward revisions to our sales and profit forecast for next fiscal
year (FY 2021) compared to our previous forecast (forecast made in thereport issued on June 25, 2019). (In the order of previous→current
forecast, we changed our forecast from Y11,000 million → Y12,600
million for sales and Y1,220 million → Y2,030 million for recurring
profit.)For next fiscal year, we have not changed our view that sales and profit
will temporarily decrease, but we reviwed the sales forecast. We believethat a full fallback in the sales of the products, the solutions, etc., due tothe event-driven high demand will be prevented to some extent by the
support of the stable subscription-based businesses as well as by newcontracts for the still-growing cloud and labor management software
businesses. We have alreadly reflected in our previous forecast the factthat SG&A costs – mainly upfront investment and sales promotion costs– could be further reduced. Therefore, in making the revision, we did
not make changes to those cost assumptions.

w In FY 2021 (next FY),
sales and profit may
temporarily decreasein a fallback from theevent-driven highdemand. However,the scale of the
fallback is expected tobe limited.

In sum, we are expecting a smaller fallback compared to the previous
fallback after a high demand from two events. In the previous fallback,in the order of FY 2014 → FY 2015, sales declined from Y10,425
million → Y8,168 million (-22% YoY); recurring profit fell from
Y1,139 million → a loss of Y158 million; and a net loss was posted.
[Figure 36] Medium-Term Financial Forecast
Unit: million yen, %Sales
Category

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Margin
SG&A Expense(% over sales)

Operating Profit(% over sales)

Recurring Profit(% over sales)

Net Profit for the Year(% over sales)

Sales (% YOY growth for all values)
Category

Products
Goods
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Margin (% YOY diff.)
SG&A Expense (% growth)
Operating Profit (% growth)
Recurring Profit (% growth)
Net Profit for the Year (% growth)

FY 2019 AR
11,439
2,516
563
3,125
2,403
2,830
57.0%
5,274
46.1%
1,248
10.9%
1,277
11.2%
906
7.9%

FY 2020 CE
13,404
3,005
566
3,489
3,160
3,132
61.4%
5,831
43.5%
2,405
17.9%
2,435
18.2%
1,572
11.7%

FY 2020 E
13,600
3,080
570
3,500
3,300
3,200
61.0%
5,600
41.2%
2,700
19.9%
2,730
20.1%
1,750
12.9%

FY 2021 E
12,600
2,350
550
3,550
3,700
2,450
56.3%
5,100
40.5%
2,000
15.9%
2,030
16.1%
1,300
10.3%

FY 2022 E
13,350
2,400
550
3,600
4,200
2,600
57.7%
5,300
39.7%
2,400
18.0%
2,430
18.2%
1,550
11.6%

FY 2020 PE
12,900
2,700
1,020
3,220
3,100
2,860
57.4%
5,805
45.0%
1,600
12.4%
1,620
12.6%
1,050
8.1%

FY 2021 PE
11,000
1,800
1,000
3,000
3,400
1,800
57.3%
5,100
46.4%
1,200
10.9%
1,220
11.1%
800
7.3%

FY 2022 PE
11,600
1,900
1,000
3,000
4,000
1,900
57.5%
5,300
45.7%
1,400
12.1%
1,420
12.2%
920
7.9%

16.9%
28.8%
3.2%
0.5%
29.6%
50.7%
2.5%
16.5%
54.6%
53.1%
105.4%

17.2%
19.4%
0.5%
11.6%
31.5%
10.7%
4.4%
10.6%
92.7%
90.7%
73.5%

18.9%
22.4%
1.2%
12.0%
37.3%
13.1%
4.0%
6.2%
116.3%
113.8%
93.2%-7.4%-23.7%
-3.5%
1.4%
12.1%
-23.4%-4.7%-8.9%-25.9%-25.6%-25.7%

6.0%
2.1%
0.0%
1.4%
13.5%
6.1%
1.3%
3.9%
20.0%
19.7%
19.2%

2.4%
14.9%
85.5%
-9.3%
-16.2%
16.7%
1.1%
13.8%
11.2%
-20.0%-21.9%-14.7%-33.3%
-2.0%
-6.8%
9.7%
-37.1%-0.1%-12.1%-25.0%-24.7%-23.8%

5.5%
5.6%
0.0%
0.0%
17.6%
5.6%
0.2%
3.9%
16.7%
16.4%
15.0%

(Ref) Prepared by Alpha-Win Research Dept (E = new forecast; PE = previous forecast). CE = the Company’s new estimate/forecast.
AR = actual result. Accounting standards for the sales of each sales category have been changed starting this fiscal year andadjustments were retrospectively made.

37/45
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
PCA (9629 TSE First Section)w Upfront investment

in new technologies,
products, businesses,
etc., will continue,
but their costs arecontrollable.

w In FY 2022, businesswill return to normal
as the fallback fromthe event-driven highdemand will haveceased. The Company
will then return to atrend of increasing
sales and profits.
w With thesubscription-based
businesses as thegrowth driver, annual
profit growth rate is
expected to be about
8-10% over the
medium term basedon normalized
figures.

Issued: 12/20/2019
As for the Company's targets for the fiscal year after the next (FY 2022,
the final year of the medium-term business plan) – consolidated sales ofY11.5 billion and operating profit of greater than Y1.5 billion – we used
to believe that the targets are somewhat high. Therefore, we had madea somewhat conservative forecast of Y11.6 billion for sales and Y1.4
billion for operating profit, having taken into account the risk factors.
However, since the subscription-based businesses have been excellent,
we largely raised our forecast to Y13.35 billion and Y2.4 billion,
respectively (Figure 36 shown previously on page 37).
Each category’s expected gross margin was not largely altered, butinstead we focused our analysis mostly on the positive effect ofimproved product mix on the gross margin. Also, although theCompany is in an investment phase, which includes business structure
reinforcement in preparation for future growth, new productdevelopment, and technology research necessary for the productdevelopment (virtualization technology, AI, Web API, and FinTechlinked technology), we predict that the general and administrative
expenses – especially the sales promotion, R&D, and personnel costs –are controllable to some extent.
Since the Company is in a phase where its subscription-based
businesses are continously expanding, we believe that if the Company
can put the new businesses described above onto a succesful track, thenit will be able to enter another growth phase and continue to increase its
sales and profits again after FY 2022.
Over the medium to long term, based on normalized figures excluding
the effect of the event-driven high demand, we are expecting an annual
sales growth rate of around 6-8% and an even greater net profit growthrate (8-10% per year). Since the Company’s business model ischaracterized by a high marginal profit ratio, the sales growth willcontribute significantly to profit growth, such that the profit growth rate
will exceed the sales growth rate. In addition, the shift to thesubscription-based (“stock-based”) business is expected to improve thestability of financial performance.

38/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019

9． Analyst’s View
◆ PCA’s Strengths and Challenges
The Company’s SWOT analysis results are listed in Figure 37.
[Figure 37] SWOT Analysis

・Brand recognition and trust earned over many years (major specialized player in the enterprise system
software market for small/medium-sized companies)

Strength

Weakness

Opportunity

Threat・Firm financial standing (debtless management)
・Growth of the subscription-based business capable of generating stable revenue
・ Strong and diversified customer base (240,000 corporate users in total)
・Taking a lead with the cloud (top-level financial performance, know-how, number of customers, & years ofbusiness for enterprise system software business targeting small/medium-sized companies)
・High barrier to market entry
・Very experienced call center staff and engineers
・Rich product lineup; provides products both as on-premises and by cloud・ Sales network (13 sales offices in Japan; 2,000 partnered companies)
・Relatively low margins
・Financial results susceptible to revisions related to accounting and tax laws, termination of OS support,
etc. (consumption tax, change in the name of the era, Windows 7, etc.)
・Subscription rate of the maintenance service is improving (from about 50 to 70%) but could still be
improved
・Highly competitive market
・Absence of a major, next-generation, growth-driving product/service
・Domestic-demand oriented; overseas expansion difficult
・Increased demand from lack of manpower and need for efficient operation (for business software in
general); work-style reform (labor management system)
・Potential for cloud services to increase users; development potential (toward small/medium-sizedcompanies and mid-tier companies)
・New products (Hyper & utilization of Keepdata), new services (transition of on-premises to subscriptionbased model), and technology innovations
・Revisions related to accounting and tax laws, etc.
・Emergence of an alternative as advanced AI technology becomes generally used, delayed productdevelopment, defects in products, etc.
・Termination risk of contracts, etc.
・Information leakage
・Rise in personnel and development costs(Ref) Prepared by Alpha-Win Research Dept.

w Long years of trust

and track record,customer base, andtechnological skill are
its strengths.

w Top-levelcompetitiveness andachievements withthe cloud. The cloudmarket has a highgrowth potential.

Describing the strengths listed in Figure 37 in more detail, the Company
is well known due to its long years of practice in the industry and thetrust that it has earned over those years. It is especially strong in certain
areas of business such as accounting software for small/medium-sizedcompanies and public benefit corporations. Its customers also have highloyalty, as there is little incentive to frequently change enterprise system
software. Additionally, the Company has been developing a
subscription-based business model with high continuity and stability byproviding maintenance support, the cloud, and version upgrades to its
customers.
On the other hand, looking at the weaknesses in more detail,profitability had been an issue as the margins had been gradually
decreasing over many years. In fact, the margins are still low compared
to its major listed competitors. This may be explained by how the
proportion of users subscribing to the profitable maintenance service is
low for the Company compared to its competitors and by how the
Company has not been developing major, long-lasting new products(not being able to fully benefit from the advantage of scale).
However, the operating margin has been recovering sharply in the past
four years and had risen to 10.9% in the previous fiscal year (24.7% thisH1). In recent years, the Company is working on shifting to thesubscription-based businesses with the cloud and is seeing signs ofchange in the revenue structure.
39/45

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
PCA (9629 TSE First Section)
w Improve profitability
and stability with thetransition to thesubscription-based
business model.

Issued: 12/20/2019
If the Company could dig up hidden demand from its growth-driving,cloud-related market with its price advantage, improve the on-premises
business by shifting to the subscription-based model, and increase theproportion of users subscribing to the maintenance service, then the
Company may be able to further improve its profitability.
Shifting the on-premises to a subscription-based business gives users
the advantage of being able to use the latest software at a fixed cost.
Meanwhile, it gives the Company the advantage of merging multiple
versions of software to streamline maintenance, development, andsupport, thus reducing the cost, as well as creating a stable revenue
source. However, some users still prefer the traditional style ofpurchasing on-premises software. In April 2020, the Company plans tocreate a specialized department to expand sales in full scale.

w Improvement in

subscription rate of
the maintenanceservices for the onpremises may lead toa higher profitability

Maintenance service contracts were an issue because the proportion ofusers subscribing to the service (including existing customers) was low,at 50%. Therefore, the Company made maintenance service contracts arequirement when newly purchasing on-premises software or whenpurchasing version upgrades. Thus, the subscription rate (for new andexisting customers) has recently been raised to about 70%. Since OBC’s
rate is about 80% and MJS’s rate is almost 100%, the subscription rate
could still be improved. An increase in the subscription rate will help
secure a stable revenue source and improve the profit margin.
As for the opportunity and threat, occurrence of events such as theconsumption tax revision and work-style reform that we currently see
will induce a high demand related to those events, which would tend tocause a higher volatility in financial performance before and after the
event. Also, we should keep note of the progress of major competitors
in catching up to the Company in the cloud-service market, in which theCompany currently takes a lead, and in their development of new
products and services.

◆ Shareholder Return and Shareholder Benefit Program
The Company’s basic policy is to stably, constantly pay dividend while
improving the ratio of net profit for the year to shareholders’ equity(ROE) under an effective management. In returning profit to its
shareholders, its policy is to determine the level of dividend to be paid
based on a comprehensive analysis of elements such as its financial
results and dividend payout ratio.
Regarding dividend, ever since the first public offering of theCompany’s stock, the ordinary dividend has not been decreased and has
been gradually increasing over the long term with several years of nochange in between (Figure 38 on page 41).
Excluding commemorative dividend, the ordinary dividend has been
kept at Y31 per share per year since FY 2011. Only in FY 2014 was acommemorative dividend paid; in celebration of “the achievement ofconsolidated sales of Y10 billion,” Y10 was added to the ordinary
dividend of Y31 to an annual total of Y41 per share. Even in FY 2015
and FY 2016 when a net loss was posted, the Y31/year dividend wasmaintained in line with the Company’s stable dividend policy.
40/45
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
PCA (9629 TSE First Section)

Issued: 12/20/2019
The targeted dividend payout ratio is 33%. Although the actual ratio
was 48.2% in FY 2018, it was 23.3% in FY 2019 and is expected to be
13.1% in FY 2020 according to the Company’s forecast (after upwardrevision) and 19.6% according to our forecast (after revision) – allbelow target. In order to achieve the target of 33% in dividend payout
ratio during this fiscal year, the Company will need to pay an annual
dividend of Y78 (a rise in dividend by Y47). As for dividend yield, it is
0.6% when calculated based on a stock price of Y5,100 (closing priceon December 20, 2019; based on a dividend of Y31).

w The target dividend
payout ratio is 33%
and the target DOE is
2.5% but the actual
results are lower. Has
been steadily paying
Y31 in dividend peryear over the longterm.

Also, the DOE, which is one of the KPIs (key performance indicators)
that the Company focuses on, was 1.9% and 1.8% in FY 2018 and FY
2019, respectively, both below the Company’s target of 2.5%. Since thenet assets are expected to increase during this fiscal year as well, if thedividend is kept the same, the DOE is expected to further decline.
In FY 2020, too, the Company has not changed its policy to maintain anannual ordinary dividend of Y31. Considering the significant
improvement in the profit level, the expected achievement of recordhigh sales and profits, and the expected dividend payout ratio (predicted
to be far below the target based on the Company’s estimated EPS), we
believe that there will likely be a dividend hike, includingcommemorative dividends, during this fiscal year or later.

w The actual annual net

yield including theshareholder benefit
plan is about 1.0% (atmaximum).

A shareholder benefit program was started in 2013, and its partial
revision was announced in July 2017. Spcifically, a Quo Card is granted
to shareholders based on the number of shares held at the end of the
March of every year. For example, shareholders with equal to or greaterthan 100 shares and less than 300 shares are granted Y2,000 worth of
Quo Card. Assuming that the stock price is Y5,100 (closing price on
December 20, 2019), then the actual annual net yield for a shareholder
with 100 shares is about 1.0% (at maximum) including the ordinary
dividend of Y31 and the shareholder benefit (Figure 39 on page 42).
Under the same condition, the actual annual net yield for OBC is about
1.6%, and for MJS it is about 1.1% which is the same as the dividend
yield since MJS has no shareholder benefit program.

w The target dividend
payout ratio is likely
to not be achieved.
Anticipating
dividend hikeincludingcommemorative
dividend and stock
split.

The Company’s financial standing is great with essentially no debt. Its
stock price has increased by three times over the last three years.
Therefore, starting this fiscal year and over the medium term, we should
keep an eye out for stock splits (1-to-2 or 1-to-3) as well as an additional
share buyback in terms of the total return ratio. A stock split has notbeen conducted since the 1-to-1.3 stock split in May 2000.
[Figure 38] Transition in Dividendand Dividend Payout Ratio

Dividend (right axis)（％）

Commemorative dividend (right axis)

300.0
281.1

250.0

(Ref) Prepared by Alpha-Win Research
Dept. based on the securities report.
Estimates/forecast (E) were made by
Alpha-Win.

Dividend payout ratio (left axis)

(Y)

45

41

40

10

10

35

200.0

30
25

150.0
100.0

132.0

116.9

30

31

30

31

31

31

31

31

20

31

31

31

33

33

15
10

50.0

47.8

47.2

FY 2009

48.2

46.5

30.9

0.0

31

ＮＡ
FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

23.3

ＮＡ
FY 2016

FY 2017

FY 2018

FY 2019

11.8

16.9

14.2

FY 2020 (E) FY 2021 (E) FY 2022 (E)41/45This 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.

50Alpha-Win Company Research Report
PCA (9629 TSE First Section)[Figure 39] Shareholder Benefit Program and Net Yield
Number of Shares Owned(greater than or equal to)
100
300
500

(less than)
300
500

Shareholder Benefit(Quo Card: Y)
2,000
3,000
4,000

Issued: 12/20/2019

Dividend: Y
31
31
31

Net Yield (maximum): %
1.00
0.80
0.76

Net yield = (dividend + benefit value) / (stock price) was calculated for the minimal amount of stock owned in each range
Stock price: Y5,100 (closing price on 12/20/2019)(Ref) Prepared by Alpha-Win Research Dept.

◆ Stock Price and Factors that May Affect Stock Pricew The upward revision

to financial results
was a positive
surprise. In response,
the stock price rose
sharply again and islargely outperforming
the TOPIX.

w Becoming more andmore recognized as adefensive stock withgood financial
performance

w The rise in
consumption tax andthe work-style reform
affects the Company
positively. Unrelated
to trade wars.

w Valuation is higher

than the average of
the First Section of theTSE, but considering
the competitor’svaluations and theCompany’s growthpotential over the
medium term, thestock price can beeven higher.

The Company’s stock price and relative stock price compared to
TOPIX for the past approximately three years are described in thesummary section (Figure C on page 3). The stock price has been risingsince around October 2018, significantly outperforming the TOPIX. In
particular, after the announcement made in October 2019 of asignificant upward revision, the stock price soared, reaching Y5,100 as
the closing price on December 20, the highest price since the beginningof the fiscal year and since becoming listed on the First Section of theTSE. The stock price has stayed high since then.
After September, the stock price had been going through short ups anddowns, but the fact that the H1 results and full-year forecast for thisfiscal year were much higher than the prior forecast seems to havedirectly given a good impression to the investors.
In addition, the Company may have become recognized as a domesticdemand-related stock with strong business performance that can benefit
from the rise in consumption tax and the government’s work-stylereform despite the increasing uncertainty of the global economy (tradewar, etc.) and of the financial performance of Japanese companies
starting this fiscal year. Another factor contributing to the highevaluation may be its high competitiveness and growth potential seenfrom its pioneering activity in providing packaged enterprise system
software via the cloud.
A comparison of major valuation indicators was made between the
Company, the market average, and its listed competitors (Figure 40 on
page 43). Thanks to the sharp rise in the stock price, its P/E for thisfiscal year is predicted to be approximately 21.6 (based on EPS
estimated by the Company for FY 2020; according to our prediction,
19.4 for this fiscal year, 26.1 for next fiscal year, and 21.9 for the year
after the next), largely exceeding the TSE First Section’s average ofabout 16.2.
While the Company’s dividend yield, at 0.6%, is largely below theaverage of the First Section (the simple average is 1.9%; the weighted
average is 2.3%), the Company’s P/B is 2.8, which is higher than theFirst Section’s average of 1.3 (based on the closing price on December
20 and the previous fiscal year’s results).
Meanwhile, compared to its competitors (4733 Obic Business
Consultants or OBC and 9928 Miroku Jyoho Service or MJS), while
42/45

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
PCA (9629 TSE First Section)

Issued: 12/20/2019
their difference is becoming smaller with the sharp rise in the
Company’s stock price, many of the Company’s valuation indicators
are still relatively low, giving its stock an undervalued impression evenafter the sharp rise. Since financial performance during this fiscal year
and next fiscal year may rise beyond the market consensus, the stock
price may further increase.

[Figure 40] Comparison of Valuation Indicators with Competitors
Company Name

PCA (consolidated)

Obic Business Consultants(OBC: non-consolidated)

Miroku Jyoho Service(MJS: consolidated)

4733

9928

[Figure 27] Comparison of Valuation Indicators with Competitors
Code
Stock Price (at 12/20 closing)Market Cap (million yen)
P/E (price-to-earnings ratio)
P/B (price-to-book ratio)
Dividend Yield (%)
EV/EBITDA
P/S (price-to-sales ratio)

9629

5,100
39,270
21.6
2.8
0.6
18.6
2.9

5,090
410,783
38.0
3.3
1.0
23.3
12.8

3,425
119,212
29.4
5.9
1.1
19.0
3.5

Market cap = shares outstanding x market stock price [at 12/20 closing]
EV/EBITDA = (market cap + interest-bearing debt - cash & deposits) / (O.P. + depreciation + intangible fixed asset amortization, etc.)
P/S = market cap / sales [the companies' estimate for FY 2020]
The companies' estimated EPS for FY 2020 used in all P/E calculations(Ref) Prepared by Alpha-Win Research Dept. based on information including the securities report and the financial results summary

w The Company’s stock
performance stands
out from its
competitors

Additionally, over the past two years or so, the Company has grown by
about 2.9x, largely outperforming its two competitors OBC and MJS
by 111% and 173%, respectively (Figure 41).

[Figure 41] Comparison of Stock Performance with Competitors(Note: stock price as of the end of November 2017 was set at zero upon creating the graph. Reflects prices up through theclosing price on December 20, 2019)250%

PCA (9629)

OBC (4733)

MJS (9928)

200%

150%

100%

50%

0%

11
/2
01
7
12
/2
01
7
01
/2
01
8
02
/2
01
8
03
/2
01
8
04
/2
01
8
05
/2
01
8
06
/2
01
8
07
/2
01
8
08
/2
01
8
09
/2
01
8
10
/2
01
8
11
/2
01
8
12
/2
01
8
01
/2
01
9
02
/2
01
9
03
/2
01
9
04
/2
01
9
05
/2
01
9
06
/2
01
9
07
/2
01
9
08
/2
01
9
09
/2
01
9
10
/2
01
9
11
/2
01
9
12
/2
01
9

-50%

(Ref) Prepared by Alpha-Win Research Dept.

43/45
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
PCA (9629 TSE First Section)

w Going forward, points
of interest are this andnext fiscal year’s
performance and thecontents of the new
medium-termbusiness plan.

Issued: 12/20/2019
Going forward, the following events or factors may have an impact on
the stock price:
The first point to note is the current fiscal year’s performance (upside).
Although demand during this H2 and especially in Q4 are uncertain,such as due to the fallback from the event-driven high demand, theCompany’s H2 forecast seems to be on the conservative side as
mentioned above. The full-year results have already been revised
upward and the market participants' expectations seem to already bereflected in the stock price to some extent, but depending on the extent
of the upward revision, the stock price may have room for more growth.
Next, we should look forward to next fiscal year’s financial forecast
and the medium-term plan that will probably be announced in April to
May of 2020. Next fiscal year, although the negative impact on
business results due to the fallback from the event-driven high demand
is a concern, the anticipated decline in sales and profits seems to already
be reflected in the market. However, since the subscription-based
business is in a phase of continuous expansion, we believe that asignificant decline in profit could be avoided if the costs are properly
controlled. In any case, for the time being, the key point will be the rateof change in financial results during the current and the next fiscal year.
Also, over the medium to long term, the following topics are ongoingthemes that will continue to draw attention: the cloud, the work-stylereform, the transition of on-premises to the subscription-based model,
and the development and growth of new products and businesses
utilizing new technologies. For now, we expect that the cloud and thelabor management system will be the driving forces, bringing theCompany back to growth starting in the year after the next (FY 2022)
such that it can maintain sales and profit growth. Therefore, we expect
the decline in stock price to also be temporary.
Basic policies have already been set out in the medium- to long-termbusiness plan. When formulating the next medium-term plan, if more
specific measures and their effects on earnings (upward revision of
profit targets, etc.) become confirmed, then the stock price may rise.
Specifically, we want to watch the following points that are expected toaffect stock price and performance:
・Growth rate of the number of contracts for the cloud, which is thegrowth driver・ Changes in the competition with major competitors in the cloudbusiness
・Sales growth rate of the subscription-based businesses
・Change in the proportion of users subscribing to the maintenanceservice・ Progress with the transition of the on-premises software to thesubscription-based business model (whether it can become a major
component of the monthly-charging, subscription-based business)
・Fallback from the high demand induced by the rise in the consumption
tax rate and the termination of Windows 7 support
・Progress with margin improvement
44/45This 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
PCA (9629 TSE First Section)

Issued: 12/20/2019
・Performance of Xronos’s labor management system
・ Progress with the development of new services and products(performance of business utilizing the acquired Keepdata’s data,acquisition of new mid-tier corporate users with the Hyper, etc.)
・Shareholder return measures such as dividend hike, stock split, andshare buyback
・New tax regulations and changes to regulations
・Progress with the M&A strategy＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-WinCapital 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 be liable for any consequences including direct or indirect loss, lost profit, or damage
resulting from the use of or reliance on this Report. Investors who read this report must make theirown 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 public information and supplemental information including interview(s) by the analyst. AlphaWin, the writer, and/or other persons involved in the publication of this Report may already hold, or buy
and sell in the future, the stock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject tochange without notice. For the most recent (updated) version of this Report, please see our website（http://www.awincap.com/）. We do not warrant or represent that the information in this Report isaccurate, reliable, complete, appropriate, or fit for any purpose and do not accept any responsibility
or liability.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied,cited, or translated without our consent.
For inquiries regarding this Report, please send us an e-mail to info@awincap.com. However, Alpha-Win
and the writer of this Report do not have any obligation to reply to inquiries.
PFV2019-1229-18

45/45
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.