Alpha-Win Company Research Report
CUBE SYSTEM INC.
(2335 TSE First Section)● SummaryIssued: 11/6/2020

Alpha-Win Capital Inc. Research Department
http://www.awincap.com/◆Independent, mid-tier system integrator with long-term, stable growth・CUBE SYSTEM INC. (hereinafter, the “Company”) is an independent, mid-tier system integrator listed on theFirst Section of the TSE. Its main customers include Nomura Research Institute (“NRI”) and Fujitsu Group. It
develops systems and provides services mainly for the finance, distribution, and telecommunications industries.
Its strengths are its excellent customer base, extensive experience, strong trust from its customers, and the skill andexpertise that it has built up over the years. Founded in 1972, it has about 48 years of history.
・With the exception of one fiscal year, the Company has been continuously increasing sales YoY for the past 22
years. During this period, the annual sales growth rate (simple average of the rate of increase in sales) was +7.0%
and its annual recurring profit growth rate (simple average) was +8.3%; it has been steadily expanding its businessand keeping its business in the black over many years. The recurring margin has stably been at around 7% and theincrease in sales has been contributing directly to increases in profit, dividend, and market capitalization. Starting
this fiscal year, the Company will further focus on the digital business under the new president.

◆Consolidated financial results for the first half of FY 2021: sales slightly grew by 0.2%
YoY and operating profit grew significantly by 41.0% YoY. Record-high H1 profit
achieved thanks to improved gross margin and reduced SG&A expenses.
・Consolidated financial results for the first half of FY 2021 (April to September 2020; hereinafter, “H1”; note that
the Company’s fiscal year is March-ending, so FY 2021 ends in March 2021) were as follows: sales of Y7,083
million (+0.2% YoY), operating profit of Y552 million (+41.0% YoY), recurring profit of Y603 million (+51.7%
YoY), and net profit attributable to owners of the parent (hereinafter, “net profit”) of Y400 million (+65.5% YoY)
(Figures 1-4). As in the first quarter (April to June 2020; hereinafter, “Q1”), sales were about the same on a YoY
comparison. However, unlike the previous H1, there were no unprofitable projects during this H1, and theCompany was also able to hold down costs and improve operational efficiency during the COVID-19 crisis. As aresult, a significant profit growth was achieved. In fact, H1 record highs were achieved for all three profit items– operating, recurring, and net. The gross margin rose from 17.1% in the previous H1 to 18.7% in this H1 (as ageneral rule, numbers have been rounded to the first decimal place; the same applies to below), and the SG&A
expenses ratio fell from 11.5% to 10.9%, resulting in a rise in operating margin by approx. 2.3 percentage points
from 5.5% to 7.8% (Figures 1 and 4). Compared to the Company's plan (not disclosed), sales seem to have beensmaller than expected, while the profits had probably exceeded the plan. Although the COVID-19 crisis had
caused sales activity to become stagnant and affected the amount of orders received as well as sales, the impact
was limited and in fact nearly negligible as far as profit is concerned.
・Overall, sales for the first half increased slightly by Y12 million YoY and gross profit increased significantly by
Y118 million YoY (+9.8%) thanks to the improvement in the profit margin. First-half results by service category(three categories) are described below.
・Sales of its core business, or the System Integration Service (SIS), increased by Y45 million (+0.9% YoY). The
increase in system development projects for delivery service companies in the transportation industry and for
education business companies had compensated for the completion of system development projects forconstruction machinery manufacturers in the manufacturing industry as well as the decrease in co-op-related
projects for the distribution industry. No unprofitable projects were included in this H1’s results. Mostly owing to
the improvement in gross margin (16.7% last H1 ⇒ 18.4% this H1), gross profit increased by Y94 million(+11.4% YoY) to Y918 million.
・Due to the decrease in projects outsourced from the distribution industry, sales of the System Outsourcing Service(SOS) decreased by Y119 million (-9.9% YoY) to Y1,091 million. Its gross margin also declined, causing its grossprofit to decrease by Y43 million (-19.1% YoY) to Y182 million.
・Thanks to the increase in system development projects for group banks of major distribution companies, as well
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1/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 11/6/2020

as the steady progress of the consulting projects, sales of the Professional Service (ProS) increased by Y86 million(+9.4% YoY) to Y1,002 million and its gross profit increased by Y67 million (+42.6% YoY) to Y225 million.
・Sales by industry (four sectors) were mostly as already described above. Sales and profit growth of the businesswith the telecommunications and transportation industries contributed significantly to the overall results (+348
million yen in sales and +148 million yen in profit, YoY; Figure 1), compensating for the sales and profit declineof the business with the finance industry (system development projects were scaled down) and the distribution
industry (the completion of projects related to the consumption tax revision had a large impact).
・By major customer group, a significant sales growth was only seen for NRI (sales of Y3,457 million; +412 million
yen or +13.5% YoY), for which there was an increase in new system development projects. Sales of NRI accounted
for 48.8% of the total sales in H1.
[Figure 1] Change in Financial Results in Q1, Q2, and H1 (first half; cumulative through Q2)
Q1 Results
Unit: million yen

By Service Category

Total

Consolidated Sales
Sales

Gross Profit

Gross Margin (%)

By Industry

Q1 FY 2021
Apr-June 2020

Change in Amount / Diff.
YoY: million yen / %% Change
YoY: %

3,379
2,411
520
447
354
95
73
14.7
18.4
16.5
993
771
485
396
245
486
181
122
74
45
34
66
18.2
15.8
15.3
11.4
13.9
13.6
524
15.5
424
12.5
100
3.0
107
3.2
50
1.5

3,373
2,311
506
555
437
82
123
18.9
16.3
22.2
989
675
592
329
182
603
191
123
141
56
24
105
19.3
18.2
23.8
17.0
13.2
17.4
643
19.1
401
11.9
242
7.2
248
7.4
166
4.9

-6
-100
-14
108
83
-13
50
4.2
-2.1
5.7
-4
-96
107
-67
-63
117
10
1
67
11
-10
39
1.1
2.4
8.6
5.7
-0.7
3.8
119
3.6
-23
-0.7
142
4.2
141
4.2
116
3.4

-0.2
-4.1
-2.7
24.2
23.4
-13.7
68.5

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

Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)

Sales

Gross Profit

Gross Margin (%)

Total

Q1 FY 2020
Apr-June 2019

Name of Service/Industry

Total Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit

O.P. Margin (%)
Recurring Profit

R.P. Margin (%)
Net Profit

N.P. Margin (%)[Figure 2] Quarterly Change in Sales

Q2 FY 2020
July-Sept 2019

Q2 FY 2021
July-Sept 2020

3,692
2,532
691
469
470
130
84
2.0
0.3
0.7
1,125
916
432
417
209
593
228
165
66
62
34
127
18.2
15.9
15.2
11.6
14.1
13.6
683
18.5
391
10.6
292
7.9
290
7.9
191
5.2

-0.4
-12.5
22.1
-16.9
-25.7
24.1
5.5
0.8
90.5
24.4
-29.4
59.1

22.7
-5.4
142.0
132.1
231.7

(unit: million yen)

Change in Amount / Diff.
YoY: million yen / %% Change
YoY: %

18
145
-106
-22
11
-30
18
-2.5
0.1
-0.5
-52
-187
241
-50
-5
71
-29
-37
81
5
1
-20
1.1
2.4
8.7
5.5
-0.5
3.8
-1
-0.1
-19
-0.6
18
0.4
65
1.7
43
1.1

-0.2
-4.1
-2.8
24.1
23.2
-13.6
66.9

3,710
2,677
585
447
481
100
102
-0.5
0.4
0.2
1,073
729
673
367
204
664
199
128
147
67
35
107
19.3
18.3
23.9
17.1
13.6
17.4
682
18.4
372
10.0
310
8.4
355
9.6
234
6.3

-0.4
-12.5
21.9
-16.9
-25.6
24.2
5.7
0.8
91.4
22.7
-28.0
58.7

-0.1
-4.9
6.2
22.3
22.6

H1 FY 2020
Apr-Sept 2019

H1 FY 2021
Apr-Sept 2020

Change in Amount / Diff.
YoY: million yen / %% Change
YoY: %% of Total Change%% of Total
%

7,083
4,988
1,091
1,002
918
182
225
18.4
16.7
22.4
2,062
1,404
1,265
696
386
1,267
390
251
288
123
59
212
18.9
17.9
22.8
17.7
15.3
16.8
1,325
18.7
773
10.9
552
7.8
603
8.5
400
5.7

12
45
-120
86
94
-43
68
1.7
-2.0
5.2
-56
-283
348
-117
-68
188
-19
-36
148
16
-9
19
-0.4
0.8
7.4
4.4
0.3
-1.1
118
1.6
-42
-0.7
160
2.3
206
2.9
159
2.3

0.2
0.9
-9.9
9.4
11.4
-19.1
42.6

100.0
375.0
-1000.0
716.7
79.7
-36.4
57.6

100.0
70.4
15.4
14.1
69.3
13.7
17.0

-16.1
-30.5
125.4
13.6
-7.6
16.1

61.1
41.6
37.5
20.6
11.4
37.6
60.7
39.1
44.9
19.2
9.2
33.0

-

-

7,071
4,943
1,211
916
824
225
157
16.7
18.7
17.2
2,118
1,687
917
813
454
1,079
409
287
140
107
68
193
19.3
17.1
15.4
13.3
15.0
17.9
1,207
17.1
815
11.6
392
5.5
397
5.6
241
3.4

-2.6
-16.8
37.9
-14.4
-14.9
17.4
-4.7
-12.6
104.8
14.4
-13.0
9.9

9.8
-5.2
16.8
14.7
33.3

[Figure 3] Quarterly Change in Operating Profit(unit: million yen)

450

450

400

400
350

350
300

300
250

250
200

200
150

150

100

100

50

50

0
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

Q1

Q3

Q2

FY 2019

FY 2020

FY 20210
FY 2014

Q4[Figure 4] Quarterly Change in O.P. Margin(unit: %)FY 2015

FY 2016

FY 2017

FY 2018

Q1

Q3

Q2

FY 2019

FY 2020

FY 2021

Q4

12.0%
10.0%

(Note) Figures 1-4 were prepared by Alpha-Win Research
Dept. based on the financial results summary andfinancial results supplemental briefing materials. Due toprocessing of data during calculations, values for thesame item may slightly differ in this report, including thefigures and tables. FY 2021 values for Q1, Q2, and H1
are actual results and the values for the full year (FY)
are the Company’s forecasts.

8.0%
6.0%
4.0%
2.0%
0.0%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Q1

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Q2

Q3

Q4

FY

2/7

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

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

Issued: 11/6/2020

・Figure 5 describes the factors that increased or decreased operating profit during this H1. Although sales had
stayed about the same and the personnel expenses rose (by approx. +40 million yen YoY; included in “otherexpenses”), profit grew mainly due to the optimization of human resources (contributed to profit by +105 million
yen YoY), streamlining of operation through digitalization (+42 million yen YoY), and elimination of unprofitableprojects (+63 million yen YoY). Under non-operating profit/loss, although not mentioned in the initial forecast,
Y44 million was recorded as gains on investments in partnership (last H1: Y5 million). As a result, the growth
rates for recurring profit and net profit were both greater than the operating profit growth rate.
[Figure 5] Factors that Increased/Decreased Operating Profit in H1 (cumulative through Q2)(unit: million yen)(unit: million yen)

Reducedexpenses by
optimizing
resources
Rise in profit from businessexpansion and improvement in
the earning power of theexisting businesses

Increase in
R&D
investments,
etc.

Eliminatedunprofitableprojects

Worked on digitalizationof operation

Increase inotherexpenses

+42

-60

+63

552

+105
-2

392

H1
FY 2020+12+160 million yen YoYH1
FY 2021(Note) Financial results supplemental briefing materials; partially edited and modified.

・In the second quarter (July to September 2020; hereinafter, “Q2”), sales were Y3,710 million (+0.5% YoY),
operating profit was Y310 million (+6.2% YoY), recurring profit was Y355 million (+22.4% YoY), and net
profit was Y235 million (+23.0% YoY) (Figures 1-3). As with Q1, profit also increased on a YoY comparison inQ2. Due to seasonal variations, this Q2’s sales and operating profit were about 10% and 28% greater than in Q1,
respectively, but the order backlog decreased slightly from Y3,983 million ⇒ Y3,909 million.
・In the Company's current business model, sales growth is generally directly correlated with the number of
employees. The total number of employees in Japan and overseas has been increasing from 749 in Sept. 2018 (atend of month) ⇒ 760 in Sept. 2019 (+11; +1.5%) ⇒ 791 in Sept. 2020 (+31; +4.1%). In recent years, sales per
employee in Japan have stayed about the same but operating profit per employee in Japan has improved
significantly (in the same order as above, H1 operating profit per person has grown from 547 ⇒ 590 ⇒ 782
thousand yen per person). As the Company has said, while the future impact of COVID-19 remains uncertain,
since system development demand is still strong (non-face-to-face, DX businesses such as those related to remote
work, EC, and AI), it is somewhat short of staff. The Company has not been able to make as much progress with
mid-career recruitment as expected, but it plans to increase recruitment through web interviews and other means
and improve productivity and efficiency by, for instance, optimizing human resources allocation.
・There has been no significant changes in the balance sheet as of the end of H1. The Company has ample liquidity
on hand, with Y4 billion in cash and deposits (equivalent to 3.4 months of average monthly sales in H1; essentiallydebt-less). Its financial standing is also firm, with an equity ratio of 69.6%.

◆ No change to the initial full-year forecast made at the beginning of the FY. Greater
likelihood of achieving record-high profits.
・The Company has not made changes to its full-year forecast announced at the beginning of the fiscal year thatsales will be Y16,000 million (+8.8% YoY), operating profit will be Y1,120 million (+16.8% YoY), net profit willbe Y700 million (+33.3% YoY), and annual dividend will be Y18 per share (interim dividend has been decided tobe Y8). It has also not changed its forecast for this full fiscal year’s sales by industry since the beginning of the
fiscal year. Like the previous fiscal year, the Company expects to achieve sales and profit growth this fiscal year.
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3/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 11/6/2020

In fact, it plans to achieve record-high sales for another consecutive year as well as record-high profits (past record
highs: operating profit of Y964 million in FY 2015 and net profit of Y628 million in FY 2016). It will also aim
again to achieve Y1 billion each in operating and recurring profit for the first time (it had tried to achieve this goal
last fiscal year too but was unsuccessful).
・In H1, progress against the Company’s full-year forecast was 44.3% for sales (last H1: 48.1%) and 49.3% foroperating profit (last H1: 40.9%). The sales growth rate in H1 was lower than the Company’s plan for the full year,
but the profit growth rate was significantly greater. When the H1 results are subtracted from the Company’s
disclosed full-year forecast, the expected results for the second half (October 2020 to March 2021; “H2”) comeout to be Y8,917 million for sales (+16.8% YoY), Y568 million for operating profit (+0.2% YoY), and Y300
million for net profit (+5.6% YoY). Operating margin is expected to be 6.4% in H2, worsening in profitability
from the previous H2’s 7.4% and this H1’s 7.8%.
・Taking into account the risks pertaining to COVID-19, Alpha-Win Research Department had made a slightly
more cautious full-year forecast than the Company. Indeed, due to the COVID-19 crisis, the Company’s sales
activity has been stagnated especially for new negotiations and some of its corporate customers have also beenscaling down their IT investments due to worsened financial performance. As a result, in H1, the amount oforders received and the order backlog decreased by 3.7% and 6.0% YoY, respectively. Sales also only increased
by 0.2% YoY. However, because some of its customers with strong financial performance have been starting toactively conduct strategic IT investments, the Company has been able to maintain its sales. Also, its measures toimprove and streamline operation have been more effective than expected, leading to a surprising improvementin the profit margins. Considering this current situation, we decided to keep our original full-year sales forecast
for this fiscal year, which is slightly below the Company's forecast. With regards to profit, the Company’s
assumptions for the profit margins in H2 seem to reflect a cautious consideration of the various risk factors aswell as the costs related to upfront investment in areas of growth. Therefore, we raised our profit forecast for thefull fiscal year to about the same level as the Company’s forecast.
・We also reviewed our forecast for the Company’s financial results over the medium term (next fiscal year onward).
We revised sales downward and profit upward. However, since these forecasts were made based on the assumptionthat the economic environment will gradually normalize, the medium-term profit forecasts may need to be revised
again depending on the COVID-19 situation.
・As the Japanese government continues to promote and accelerate digitalization, the Company’s users (companies,
organizations, etc.) have been further increasing their IT investment in order to adapt to the changes in the world
with and after COVID-19, as they develop new business models, strengthen their competitive advantage, work on
solving HR shortages, streamline and speed up operations, and make progress with DX. Therefore, the Company
has a large growth potential over the medium to long term. In fact, we believe that the Company will be able tocontinue to stably increase its sales and profit at about 8% per year (under normal conditions) through the
expansion of the Enhancement business, new customer development, development of new or overseas businesses,
and improvement of productivity through various measures.

◆The Company’s recent activities (COVID-19 response, updated management policy, etc.)
・The Company’s four task forces headed by the president have been working on optimizing working styles for the
post-COVID-19 world and the new normal (please refer to the Q1 report published in August 2020 for details).
The goal is to create a new way of working where each employee can work from their most suitable location interms of the characteristics of their jobs as well as their abilities. Currently, through the remote work system, morethan 50% of its employees work from home.
・The Company has been continuing to focus on strengthening its sales activity while taking into account the
COVID-19 situation (decentralized/non-contact business operation through the use of digital technology,
combined with face-to-face sales), prioritizing and strengthening approach toward customers who are actively
conducting strategic IT investments, maintaining and expanding the Enhancement business with its major
customers, and acquiring new and promising projects (projects related to AI-based image recognition technology
and blockchain, digitalization systems for the government, etc.).

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4/7

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

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

Issued: 11/6/2020

・The new president has mentioned in the “Shareholder Letter” (message from the president to shareholders thatwill be published semi-annually starting this H1) that the Company will “continue to transform itself and take on
new challenges with the DX theme to meet the society’s needs” and at the same time work on further ensuring
sustainable management. In the management vision V2026, the Company has set out its plan to strengthen its
proposal-based business (proposal of solutions to customers/industries based on the Company’s technology andexpertise in its customer’s industries, followed by the providing of the corresponding services) and contract-based
business (contract development of information systems according to customer request) and achieve businessgrowth mainly through the SI and digitalization businesses.

◆ Stock price and characteristics: domestic-demand-related, stable growth stock that has
been significantly outperforming the TOPIX over the long term.
・Over the past eleven and a half years or so, the Company’s stock price has increased by about six times and has
been outperforming the TOPIX by about 510% thanks to its solid financial performance. It has also beensignificantly outperforming the TOPIX and its competitors (HIMACS and Toho System Science; Figure 6) overthe past six months. Its valuation is relatively somewhat high (estimated current average for TSE First Section:
forecasted P/E of 25.3 and weighted dividend yield of 2.1% for this fiscal year and actual P/B of 1.2 in the previous
fiscal year).
・Due to the COVID-19 crisis, financial performances of companies seem to have split into two ends of the spectrum,with some companies revising their forecasts upward while others – even major, listed companies – have been
posting large profit drops and enormous net losses and decreasing or terminating their dividend payment.
Meanwhile, the Company has become increasingly more likely to achieve record-high profit and double-digit
profit growth this fiscal year. The Company’s stock price seems to reflect a valuation premium resulting from themarket’s high evaluation of the Company as a domestic-demand-related, defensive, and stable growth stock withsolid financial performance.
・Over the short term, its stock price will likely be affected by whether and when the COVID-19 crisis will settle
down, how far business activities will recover, and the quarterly trends in the amount of orders received and in theoverall financial performance (level of sales and profit margins and whether there will be unprofitable projects) in
Q3 onward. Over the medium term, stock price may also be affected by the following factors: development of new
customers, development of new technologies and areas such as DX and their contribution to financial performance;
overall sales growth rate; changes in operating margin and operating profit growth rate; shareholder return(dividend hike, share buyback, and stock split); and the financial performance and IT investment trends of Japanesecompanies (the Company’s current and potential end users). Going forward, if the Company maintains a stable,
double-digit annual growth rate for its profit (EPS), we believe that it will be able keep its current level of valuationand have a stock return that matches the growth in EPS.
[Figure 6] Comparison of Valuation with Competitors
Company Name
Code
Stock Price (at 11/4 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)
Company Forecast for FY 2021 Sales (million yen)YoY Sales Growth Rate (%)
Company Forecast for FY 2021 Operating Profit (million yen)
YoY O.P. Growth Rate (%)
Company Forecast for FY 2021 O.P. Margin (%)

CUBE SYSTEM(CS: consolidated)

HIMACS(HM: consolidated)Toho System Science(TS: non-consolidated)

2335

4299

4333

1,350
20,628
26.2
3.1
1.3
16.4
1.3
16,000
8.8
1,120
16.8
7.0

1,197
14,858
15.8
1.4
2.1
8.6
1.0
15,100
-1.6
1,100
8.7
7.3

937
12,992
18.0
1.6
2.7
5.5
1.1
11,700
0.1
920
0.5
7.9

Market cap= (shares outstanding) x (market share price [at 11/4/2020 closing])
The companies' planned EPS and dividend values for FY 2021 were used in all P/E and dividend yield calculations.
Actual BPS values of H1 FY 2021 were used in P/B calculations.
EV/EBITDA=(market cap + interest bearing debt - cash&deposits)/(O.P. + depreciation + intangible fixed asset amortization)*Values for interest-bearing debt and cash & deposits are actual values as of the end of H1 FY 2021.
P/S=market cap / sales [the companies' forecasts for FY 2021](Note) Prepared by Alpha-Win Research Dept. based on each company’s financial results summary

Short Report

5/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 11/6/2020

 2335 CUBE SYSTEM Sector: Information & Communication Figure A
FY

2018
2019
2020
2021
2021
2021
2022
2023
2019
2020
2019
2020
2019
2020
2020
2021

Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPS

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

(%)

(Y)

(Y)

(Y)

13,55914,325
14,70816,00015,30015,30016,00017,000
3,379
3,373
3,692
3,710
7,071
7,083
7,637
8,917

5.1
5.6
2.7
8.8
4.0
4.0
4.6
6.3
9.6
-0.2
-2.1
0.5
3.2
0.2
2.2
16.8

2.9
5.1
-11.9
33.3
24.8
33.3
5.0
8.8
-34.2
229.3
28.2
23.0
7.3
65.5
-23.5
5.6

40.59
43.25
38.69
51.56
48.20
51.56
54.08
58.87
3.70
12.17
14.13
17.30
17.83
29.47
20.86
22.09

372.23393.29411.96454.10490.24529.10379.63418.69411.96440.07411.96440.07411.96

CE
Old E
New E
New E
New E
Q1
Q1
Q2
Q2
H1
H1
H2
H2 - CE

855
921
959
1,120
1,050
1,120
1,180
1,280
100
242
292
310
392
552
567
568

9.5
7.8
4.1
16.8
9.5
16.8
5.4
8.5
-8.8
141.3
17.3
6.2
9.4
41.0
0.7
0.2

892
959
976
1,120
1,050
1,120
1,180
1,280
107
248
290
355
397
603
579
517

10.0
7.5
1.7
14.7
7.6
14.7
5.4
8.5
-19.0
130.8
18.9
22.4
5.6
51.7
-0.7
-10.7

567
596
525
700
655
700
735
800
50
165
191
235
241
400
284
300

16.0
16.0
18.0
18.0
18.0
18.0
20.0
20.0
0.0
0.0
8.0
8.0
8.0
8.0
10.0
10.0

(Note) CE: the Company’s forecast. E: Alpha-Win Research Dept.’s forecast. Q1: Apr-June. Q2: July-Sept. H1: Apr-Sept. H2: Oct-Mar.

 Stock Price and Valuation Indicators: 2335 CUBE SYSTEM Figure B
11/4/2020

Item

Item

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)1,350

Last FY (actual)

34.9

3.3

1.3%

46.5%

Shares Outstanding (thou.)

15,280This FY (est.)

26.2

3.0

1.3%

34.9%

Market Capitalization (million yen)

20,628

Next FY (est.)

25.0

2.8

1.5%

37.0%

Dilutive Shares (thou.)0

Equity Ratio at End of This H1

69.6% Last FY's ROE

9.6%(Note) Estimates were made by Alpha-Win Research Dept.

【 Stock Chart (end-of-week prices): 2335 CUBE SYSTEM 】 Figure C
(Y)
1,500
1,400

2.00

Stock price (left axis)
Price relative to TOPIX (right axis)

1.90
1.80

1,300

1.70

1,200

1.60

(Note) Estimates had been made by Alpha-Win Research Dept.

1.50

1,100
1,000
900

1.40
1.30
1.10
1.00

700

0.90
0.80
0.70
0.60
(M
M
/Y
Y
)

09
/1
6
11
/1
6
01
/1
7
03
/1
7
05
/1
7
07
/1
7
09
/1
7
11
/1
7
01
/1
8
03
/1
8
05
/1
8
07
/1
8
09
/1
8
11
/1
8
01
/1
9
03
/1
9
05
/1
9
07
/1
9
09
/1
9
11
/1
9
01
/2
0
03
/2
0
05
/2
0
07
/2
0
09
/2
0

500

Performance
Return vs. TOPIX
3.0%
-0.1%
23.0%
22.3%
74.9%
68.0%
70.2%
77.8%

1.20

800

600

Period1 month
3 months
6 months
12 months(Note) Reflects stock and index prices throughthe closing price on 11/4/2020. Performance isthe comparison of the price on 11/4/2020 with themonth-end price of each corresponding period.
E.g. performance for the 1-month period
compares the closing price at the end of Octoberwith the closing price on 11/4.

(Note) From the first week of September 2016 to the first week of November 2020 (reflects prices through the closing price on 11/4)

Short Report

6/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 11/6/2020＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital
Inc. (hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not beliable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use ofor reliance on this Report. Investors who read this Report must make their own decisions on all investment
matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally accessible
public information and supplemental information including interview(s) by the analyst. Alpha-Win, the writer,
and/or other persons involved in the publication of this Report may already hold, or buy and sell in the future, thestock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject to change
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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.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied, cited, ortranslated 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.
SV202011-1300

Short Report

7/7This 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.