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

Issued: 2/14/2023

Alpha-Win Capital Inc. Research Department
http://www.awincap.com● Summary◆ Mid-tier system integrator with long-term, stable growth・CUBE SYSTEM INC. (hereinafter, the “Company”) is a mid-tier system integrator (SI) listed on the TSE Prime
Market. Its main customers include Nomura Research Institute (NRI) and the Fujitsu Group, and it develops
systems and provides services mainly for the financial, distribution, transportation, and telecommunicationindustries. Its strengths are its excellent customer base, extensive experience, high credibility, and the technology
and expertise that it has built up over the years. Founded in 1972, it has about 50 years of history.
・With the exception of one fiscal year, the Company has been continuously increasing sales YoY for the past 21
years. During this period, its annual sales growth rate (simple average of the rate of increase in sales) was +6.1%
and its annual recurring profit growth rate (simple average) was +7.3%. It has been steadily expanding its businessover the long term and has always maintained a profit. Its recurring margin has stably been around 7% and theincrease in sales has been contributing directly to increases in profit, dividend, and market capitalization. In FY
2022 (note that the Company’s fiscal year is March-ending, i.e., FY 2022 ended in March 2022), it achieved recordhigh sales and profits. It also increased dividend for the third year in a row.
・In April 2022, its market listing was changed from the TSE First Section to the newly established Prime Market.
・In December 2022, NRI took a stake of over 20%, and the Company is expected to become an affiliate (equitymethod affiliate) of NRI.

◆Formed a capital and business alliance with Nomura Research Institute (NRI)・In December 2022, the Company formed a capital and business alliance with Nomura Research Institute (“NRI”;
securities code of 4307) and executed a third-party allotment of new shares to NRI. Additionally, NRI acquired
some more shares through off-floor trading on the stock exchange. As a result, NRI’s shareholding ratio increased
from 1.51% to 20.18%, making it the Company’s largest shareholder.
・NRI is a SI of the Nomura Securities group listed on the TSE Prime Market. With a market capitalization of 1.8
trillion yen and this fiscal year’s expected sales of 690 billion yen and net profit of 77 billion yen, it is a large,
blue-chip company ranked as one of the top ten companies of the industry. It provides both consulting and IT
solutions and has top-level profitability in the industry as well as a strong customer base particularly in the financial
industry. The Company has been in a long-term cooperative relationship with NRI, which is also its most importantclient (51.5% of sales were to NRI in the previous fiscal year). The Company’s president Masahiro Nakanishi andtwo of the directors also used to work at NRI before joining the Company.
・As a result of this capital alliance, the Company was able to raise 1,636 million yen in net sum. With this raised
capital, in addition to its capital on hand, it will invest a total of 2,180 million yen over four fiscal years tostrengthen its production facilities and production system toward further growth (Figure 1).
・In terms of business, some of the Company’s plans are to strengthen its long-term and ongoing relationship with
NRI, expand its business domain, more fully utilize its production sites, enhance and expand its production system,and exchange personnel. The alliance can be seen as a positive change contributing to the Company’s businessexpansion and stable growth over the medium and long term.
【Figure 1】How the Raised CapitalWill Be Used and Their
Schedule (Plan)(Note) Prepared by Alpha-Win Research
Dept. based on the news release.

Short Report

Fiscal Year
Amount
Used

Unit: million yen, %Total (amount): ①＝➁+③
Percent of Entire Investment
Production Facilities: Subtotal ②(breakdown shown below)
Nearshore (create new regional sites)
Nearshore (enhance existing sites)
Prepare and enhance remote work environment
Enhance offshore sites / form alliances with companies
Main Use of
Purchase software assets
CapitalProduction System: Subtotal ③(breakdown shown below)
Invest in recruitment (gain employees for production)
Invest in training (employee development)
Sophistication of production/quality management
Enhance engagement (with employees)

FY 2023120
5.5%

FY 2024845
38.8%

FY 2025805
36.9%

FY 2026
Cumulative Sum % of Entire Investment
410
2,180
100.0%
18.8%
100.0%

80

385

125

0

590

27.1%

80
0
0
0
0

160
100
50
50
25

0
50
0
50
25

0
0
0
0
0

240
150
50
100
50

11.0%
6.9%
2.3%
4.6%
2.3%

40

460

680

410

1,590

72.9%

20
10
0
10

320
30
60
50

320
30
60
270

320
30
60
0

980
100
180
330

45.0%
4.6%
8.3%
15.1%

1/11

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

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

Issued: 2/14/2023◆ Results for the first nine months of this fiscal year: 0.6% decline in sales and 15.3%
decline in operating profit YoY, mainly since there was a delay in the reallocation of
resources and the measures to improve profitability had been less effective than expected
Results for the First Nine Months: Overview
・Results for the first nine months of FY 2023 (April to December 2022; hereinafter, “the first nine months” or “Q3
YTD”) were as follows: sales of 11,972 million yen (-0.6% YoY), operating profit of 951 million yen (-15.3%
YoY), recurring profit of 953 million yen (-15.8% YoY), and net profit attributable to owners of the parent(hereinafter, “net profit”) of 628 million yen (-16.8% YoY) (Figure 2).
・Both sales and profits had fallen short of the initial plan in the first half, and results in Q3 (October to December)were also not enough to catch up to the plan. Consequently, the first nine months’ results also fell short of the plan.
・The reasons for the profit decline and the underachievement of the plan were the following: (1) there were delaysin the reallocation of resources, such as shifting resources to other projects (employees and business partners),
acquiring technological elements that will lead to gaining new projects, and developing the company structure, and(2) measures to improve profitability, such as price negotiations, automation of software development, and multitasking, were less effective than expected.
・Although sales and profits declined in the first nine months of this fiscal year, they still reached the second highest
levels in the Company’s history following the record-high sales and profits of the previous fiscal year’s first ninemonths.
【Figure 2】Summary of Results for the First Nine Months
Results for the First Nine Months

Consolidated
Category

Unit: million yen

Consolidated Sales
Sales

By Service Category

Operating Profit

Operating Margin (%)

Sales

By Industry

Operating Profit

Operating Margin (%)

Sales

By Business Model

Operating Profit

Operating Margin (%)
Consolidated

Service/Category Name

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

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

Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit

Operating Margin (%)
Recurring Profit

Recurring Margin (%)
Net Profit

Net Margin (%)

First Nine Months of FY 2022
Apr-Dec 2021

12,041
9,019
1,396
1,624
849
110
162
9.4
7.9
10.0
2,848
2,504
3,266
930
679
1,812
209
224
443
45
53
146
7.4
9.0
13.6
4.8
7.9
8.1
226
3,516
8,299
10
434
677
4.4
12.3
8.2
2,581
21.4
1,458
12.1
1,122
9.3
1,133
9.4
755
6.3

First Nine Months of FY 2023
Apr-Dec 2022

11,972
8,781
1,314
1,876
665
89
196
7.6
6.8
10.5
3,571
2,561
2,267
1,116
637
1,817
310
194
210
45
34
154
8.7
7.6
9.3
4.1
5.4
8.5
408
2,905
8,659
14
174
761
3.4
6.0
8.8
2,568
21.5
1,617
13.5
951
7.9
954
8.0
628
5.2

Change in Amount / Diff.

% Change% of Total Amount of Change% of Total

YoY: million yen / %YoY: %

%

%

-69
-238
-82
251
-184
-21
34
-1.8
-1.1
0.5
723
57
-998
186
-42
5
100
-30
-233
0
-19
8
1.3
-1.4
-4.3
-0.7
-2.5
0.4
181
-611
360
4
-259
83
-1.0
-6.4
0.6
-12
0.1
159
1.4
-171
-1.4
-179
-1.4
-127
-1.1

-0.6
-2.6
-5.9
15.5
-21.7
-19.1
21.2

-100.0-344.9-118.8363.8-107.6
-12.3
19.9

100.0
73.3
11.0
15.7
69.9
9.4
20.6

25.4
2.3
-30.6
20.0
-6.2
0.3
48.2
-13.1
-52.6
1.9
-35.7
6.0

1,047.8
82.6-1,446.4
269.6
-60.9
7.2
58.5
-17.5
-136.3
0.0
-11.1
4.7

29.8
21.4
18.9
9.3
5.3
15.2
32.6
20.4
22.1
4.7
3.6
16.2

80.5
-17.4
4.3
41.8
-59.8
12.4

262.3
-885.5521.7
2.3-151.5
48.5

3.4
24.3
72.3
1.5
18.3
80.0

-0.5
10.9
-15.3
-15.8
-16.8

(Note) Prepared by Alpha-Win Research Dept. based on the financial results summary and the financial results briefing supplemental materials. Throughout thisreport, due to processing of data during calculations, values for the same item may slightly differ (the same applies hereinafter). Note that the percent of total
amount of change is the proportion of the absolute amount of change.

Short Report

2/11This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this Report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this Report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 2/14/2023

・Since the gross margin improved by 0.8 percentage point YoY to 22.5% in Q3 (October to December), the firstnine months’ gross margin also improved by 0.1 percentage point to 21.5%. On the other hand, the SG&A expenses
increased by 159 million yen (+10.9% YoY) from 1,458 million yen to 1,617 million yen, and the SG&A expenses
ratio rose from 12.1% to 13.5%. As a result, the operating margin fell by 1.4 percentage points from 9.3% to 7.9%.
・The amount of non-operating profit shrunk from 11 million yen to 3 million yen in this fiscal year’s first ninemonths due to a foreign exchange loss of 7 million yen on transactions, such as those with the Vietnamese
subsidiary, caused by the weaker yen (the difference in the exchange rate at the time of contract and settlement)
and also because stock issuance expenses of 6 million yen associated with the increase in capital were recorded.
・There was no extraordinary income or loss recorded, and net profit also resulted in a decline of around 17% likethe operating and recurring profits.
Results for the First Nine Months: Factors that Contributed to Increase/Decrease in Operating Profit
・The factors that increased or decreased operating profit in the first nine months of this fiscal year are shown in
Figure 3. Despite sophistication and the expansion of derivative development projects in the Enhancement Business(improved profit by +177 million yen), profit was decreased by a decline in the SI Business’ sales (decreased profit
by -190 million yen), an increase in costs to strengthen its management foundation such as employee development
and IT investments (similarly, -100 million yen), and an increase in advertising expenses and other expenses
pertaining to the 50th anniversary commemoration project (similarly, -50 million yen). As a result, operating profit
declined by 171 million yen YoY (-15.3% YoY).
・The total number of employees in Japan and overseas was 860 as of the end of December 2022, having increasedby 45 employees YoY (+5.5% YoY). This caused personnel expenses to increase.
【Figure 3】Factors that Increased/Decreased Operating Profit in the First Nine Months

Decrease in salesof the SI
Business

1,122

-190

Sophistication andexpansion ofderivativedevelopment
projects in the
Enhancement
Business+177

Strengthened the
managementfoundation(employee
development and
IT investment)

Increase inadvertisingexpenses, etc.,
pertaining to
the 50th
anniversary
project(Unit: million yen)

Increase in R&D
expenses

-100
-50

-8

951

YoY: “+” for factor that increased profit and“–” for factor that decreased profit
First Nine Months (Q3)FY 2022

YoY Decline of-171 million yen

First Nine Months (Q3)FY 2023(Note) From the financial results briefing supplemental materials, with partial additions.

Results for the First Nine Months: Progress in Results
・The Company has revised its full-year forecasts downward (described later on page 7). In terms of achieving the
new forecasts, the progress during the first nine months was 73.9% for sales and 67.0% for operating profit. Since
the average progress over the past nine years was 72.3% and 66.5%, respectively, the current progress is at about
the same level as past years (this also means that the full-year forecast was revised in accordance with the results
during the first nine months).
Short Report

3/11This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this Report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this Report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 2/14/2023

Results for the First Nine Months: By Segment
・Overall, sales decreased by 69 million yen YoY in the first nine months. In addition, costs increased and profit
margins worsened, and operating profit ended up decreasing by 171 million yen YoY. Below is the analysis ofresults for the first nine months by segment.
Results by Service Category (three categories: upper rows of Figure 2 on page 2)・Regarding the System Integration Services (SIS), which is its core business, sales fell by 238 million yen YoY (2.6% YoY) to 8,781 million yen. Although the system building project for an oil company in the manufacturingindustry expanded, the project for a shipping company in the transportation industry was scaled down. Operating
margin fell from 9.4% in the first nine months of the previous fiscal year to 7.6% in this fiscal year’s first ninemonths (the same order applies hereinafter). Similarly, operating profit fell by 184 million yen YoY (-21.7% YoY)
to Y665 million.
・In the System Outsourcing Services (SOS), too, the project for a general merchandise store of the distribution
industry was scaled down, so sales fell by 82 million yen (-5.9% YoY) to 1,314 million yen. Operating margin
declined from 7.9% to 6.8%, and operating profit declined by 21 million yen (-19.1% YoY) to 89 million yen.
・On the other hand, in the Professional Services (ProS), sales increased by 251 million yen (+15.5% YoY) to 1,876
million yen and operating profit rose by 34 million yen (+21.2% YoY) to 196 million yen due to the expansion ofsystem building projects for a postal service company in the telecommunication industry and for the manufacturingindustry. It was the only service category whose operating margin rose, from 10.0% to 10.5%.
Results by Industry (four industries: middle rows of Figure 2 on page 2)
・By industry, the financial industry was the only one for which there was both sales and profit growth. In thebusiness with the financial industry, which accounted for about 30% of total sales, there was a significant increasein sales by 723 million yen YoY (+25.4% YoY) to 3,571 million yen due to the expansion of system building
projects for an insurance company and a megabank. In addition, it was the only industry among the four industry
segments whose operating margin improved, from 7.4% to 8.7%. Consequently, its operating profit rose
substantially by 100 million yen (+48.2% YoY) to 310 million yen.
・Sales to the distribution industry and other industries rose slightly at single-digit rates, but their operating margins
declined, resulting in slight operating profit declines for each. Sales to the transportation & telecommunicationindustries fell sharply by 998 million yen (-30.6% YoY) to 2,267 million yen, partly in a fallback from their large
contribution to earnings in the previous fiscal year (impact from the scale-down of the systems-related project fora shipping company). As a result, its operating profit fell by half from 443 million yen to 210 million yen, pushingdown the overall profit.
Results by Business Model (three models: lower rows of Figure 2 on page 2)・Regarding the Enhancement Business, which accounted for 72% of sales and 80% of operating profit, sales were
solid and rose by 360 million yen (+4.3% YoY) to 8,659 million yen due to the expansion of the projects for a
postal service company, a cooperative, an online bank, and a credit card company. In addition to this increase insales, process management was improved, causing the operating margin to rise from 8.2% to 8.8%. As a result,operating profit increased by 83 million yen (+12.4%) to 761 million yen.
・In the SI Business (Lift & Shift: moving from the legacy environment to the cloud environment in “Lift,” andstepwise system restructuring with optimization for the cloud environment in “Shift”), which accounted for 24%
of sales and 18% of operating profit, sales declined by 17.4% (-611 million yen) to 2,905 million yen and operating
profit fell sharply by 59.8% (-259 million yen) to 174 million yen since the system building project for a shipping
company was scaled down, despite the expansion of the project for an oil company. The operating margin was
halved from 12.3% to 6.0%.
・The Digital Business is small in scale, accounting for only 4% of total sales. However, due to new DX projects
for the distribution industry and for retailers targeting end-users and the expansion of a DX project for theconstruction industry, sales grew by 80.5% (+181 million yen) to 408 million yen. Operating profit of this businessslightly increased from 10 million yen to 14 million yen (+4 million yen). Performance of both the Digital Businessand the Enhancement Business was solid with sales and profit growth, so the decline in sales and profits for the
first nine months was due to the SI Business.

Short Report

4/11

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

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

Issued: 2/14/2023

Results for the First Nine Months: Balance Sheet
・The balance sheet as of the end of Q3 was marked by an increase in capital due to the third-party allotment of
new shares to NRI. Net assets increased from 7.2 billion yen as of the end of March 2022 to 9.1 billion yen andthe equity ratio rose from 71% to 77%. The current ratio was also at 482%, indicating the Company’s solid
financial position.
・With the capital increase, cash and deposits also increased from 5.1 billion yen to 6.6 billion yen and the Company
has ample liquidity on hand (equivalent to 4.9 months of average monthly sales; with a debt of 240 million yen, it
is essentially debt-free).
・The effective use of its excess capital had been a key point for the Company. It has now specifically announced
its plan to invest a total of 2,180 million yen (1,636 million yen raised + 544 million yen of its capital on hand)from January 2023 to March 2026 for augmentation toward future growth (mainly to increase capacity in terms ofhuman resources and facilities) (Figure 1 on page 1).

◆Quarterly Transition in Results: Improving Momentum
Quarterly Financial Performance: Results
・The transition in quarterly results (three-months basis) is shown in Figures 4 to 6 and Figure 7 on page 6.
・The momentum of financial performance (YoY rate of change) has been improving every quarter. Comparing Q1,
Q2, and Q3, the rate of increase/decrease in sales has been improving from -2.4% ⇒ -1.8% ⇒ +2.5%. Similarly,
the rates of decline for operating profit and net profit have been improving from -28.1% ⇒ -11.1% ⇒ -6.1% andfrom -34.0% ⇒ -9.5% ⇒ -5.4%, respectively (Figure A on page 10).
【Figure 4】Quarterly Change in Sales【Figure 5】Quarterly Change in Operating Profit(Unit: million yen)

(Unit: million yen)
4,500

500

4,000

450
400

3,500

350

3,000

300
2,500

250
2,000

200

1,500

150

1,000

100

500

50
0

0
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018
Q1Q2

FY 2019
Q3

FY 2020

FY 2021

FY 2022

FY 2023

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018Q1Q4Q2FY 2019
Q3

FY 2020

FY 2021

FY 2022

Q4【Figure 6】Quarterly Change in Operating Margin (Unit: %)
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%

FY
2014

FY
2015

FY
2016
Q1

Short Report

FY
2017
Q2

FY
2018

FY
2019
Q3

FY
2020

FY
2021

Q4

FY

FY
FY
2022 2023(Note) Figures 4-6: Prepared by Alpha-Win Research Dept.
based on the financial results summary and the financial
results briefing supplemental materials. Q4 FY 2023 is theCompany’s forecast.

5/11

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.

FY 2023

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

Issued: 2/14/2023

Q4: Forecast
・In Q4 (January to March 2023), the Company expects sales of 4,228 million yen (+170 million yen or +4.2%
YoY), operating profit of 469 million yen (+174 million yen or +58.9% YoY), operating margin of 11.1% (+3.8
percentage points YoY), and net profit of 322 million yen (+133 million yen or +70.3% YoY). It is expecting a
relatively high profit margin and significant increases in profits (Figure 7). It plans to achieve record highs for aquarter for sales and each of the profit.
・Companies have generally been actively conducting strategic IT investments, especially in DX. Due to this strong
demand, the order backlog is at a high level, having increased to 4,120 million yen (+151 million yen or +3.8%
YoY) as the end of this Q3. By segment, the order backlog has been increasing for the Digital Business and the SI
Business. By industry, it has been increasing for all industries except the transportation & telecommunicationindustries.
・The expected profit seems to be an achievable level since the Company has an order backlog amounting to 97%
of Q4’s expected sales, improvements have been seen in the profitability of the Enhancement Business since Q1,
and profitability improvement is expected as new employees begin work.
・The Company’s quarterly financial performance has been characterized by seasonal fluctuations, although therate of variation has been becoming smaller. Q4 (January to March) has accounted for the highest percentage ofthe entire year (27.7% of sales and 33.5% of operating profit on average over the past nine years including theprevious fiscal year). This is followed by Q2 (July to September; 26.0% and 27.3%, respectively), Q3 (October toDecember; 23.5% and 23.1%, respectively), and Q1 (April to June; 22.8% and 16.1%, respectively).
・Based on the forecasts for Q4 of this fiscal year, sales and operating profit would be 26.1% and 33.0% of theCompany’s new plan for the full fiscal year, respectively. These levels seem reasonable considering the past results
and trends.

【Figure 7】Quarterly Transition in Results (Unit: million yen)
Quarterly Results

Consolidated

Unit: million yen, %Category

Total Sales
Sales

By Service
Category

Operating Profit

Operating Margin
(%)

Sales

By Industry

Operating Profit

Operating Margin
(%)

Sales

By Business Model

Operating Profit

Operating Margin(%)
Consolidated

Service Name

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

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

Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
New RevenueRecognition
Standard

Operating Profit

Operating Margin (%)
Recurring Profit

Recurring Margin (%)
Net Profit

Net Margin (%)

Q3 FY 2023

Q4 FY 2023

Results

Results

Results

Results

Results

Results

Results

Company Forecast

Apr-Jun 2021

Q1 FY 2022

Jul-Sep 2021

Oct-Dec 2021

Jan-Mar 2022

Apr-Jun 2022

Jul-Sep 2022

Oct-Dec 2022

Jan-Mar 2023

3,987
2,985
493
508
311
37
30
10.4
7.5
6.1
934
815
1,062
318
244
610
75
84
148
20
24
24
8.1
10.4
14.0
6.5
10.2
4.0
64
1,082
2,840
0
125
253
0.0
11.6
8.9
863
21.6
483
12.1
379
9.5
390
9.8
264
6.6

Q2 FY 2022

4,073
3,082
443
548
278
31
58
9.0
7.0
10.6
927
881
1,104
339
232
591
67
79
137
14
16
56
7.2
9.0
12.4
4.1
6.9
9.5
75
1,207
2,792
1
169
198
1.3
14.0
7.1
856
21.0
488
12.0
367
9.0
362
8.9
238
5.8

Q3 FY 2022

3,981
2,952
460
568
260
42
74
8.8
9.1
13.0
987
808
1,100
273
203
611
67
61
158
11
13
66
6.8
7.5
14.4
4.0
6.4
10.8
87
1,227
2,667
9
140
226
10.3
11.4
8.5
862
21.7
487
12.2
375
9.4
380
9.5
253
6.4

Q4 FY 2022

4,058
2,949
438
672
195
26
74
6.6
5.9
11.0
1,061
838
1,019
293
239
608
87
51
89
6
17
44
8.2
6.1
8.7
2.0
7.1
7.2
124
1,129
2,804
6
88
199
4.8
7.8
7.1
870
21.4
574
14.2
295
7.3
299
7.4
189
4.7

Q1 FY 2023

3,892
2,821
440
631
172
34
64
6.1
7.9
10.3
1,128
785
826
344
206
601
101
49
70
5
11
34
9.0
6.3
8.5
1.7
5.4
5.7
102
854
2,936
-4
34
242
-3.9
4.0
8.2
785
20.2
513
13.2
272
7.0
271
7.0
173
4.9

Q2 FY 2023

4,000
2,913
448
638
226
28
73
7.8
6.3
11.4
1,209
873
745
379
221
572
101
65
77
12
12
57
8.4
7.4
10.3
3.2
5.4
10.0
141
979
2,878
9
56
260
6.4
5.7
9.0
866
21.6
540
13.5
326
8.2
324
8.1
215
5.4

4,080
3,047
426
607
267
27
59
8.8
6.3
9.7
1,234
903
696
393
210
644
108
80
63
28
11
63
8.8
8.9
9.1
7.1
5.2
9.8
165
1,072
2,845
9
84
259
5.5
7.8
9.1
917
22.5
565
13.8
353
8.6
359
8.8
240
5.9

4,228

1,229
1,039
633
1,330

242
1,195
2,791

469
11.1
491
11.6
322
7.6

Q3 FY 2023
YoY: Amount

Q4 FY 2023
YoY: %

YoY: Amount

99
95
-34
39
7
-15
-15
-0.0
-2.8
-3.3
247
95
-404
120
7
33
41
19
-95
17
-2
-3
2.0
1.3
-5.3
3.1
-1.2
-1.0
78
-155
178
0
-56
33
-4.9
-3.6
0.6
55
0.8
78
1.6
-22
-0.8
-21
-0.7
-14
-0.5

2.5
3.2
-7.4
6.9
2.7
-35.7
-20.3

170

4.2

25.0
11.8
-36.7
44.0
3.4
5.4
61.2
31.1
-60.1
154.5
-15.4
-4.5

168
201
-386

15.8
24.0
-37.9

190

16.7

89.7
-12.6
6.7
0.0
-40.0
14.6

118
66
-13

95.2
5.8
-0.5

174
3.8
192
4.3
133
3.0

58.9

6.4
16.0
-6.1
-5.5
-5.4

(Note) Prepared by Alpha-Win Research Dept. based on the financial results briefing supplemental materials.

Short Report

YoY: %

Jan-Mar 2023 VS Jan-Mar 2022

Oct-Dec 2022 VS Oct-Dec 2021

6/11

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.

64.4
70.3

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

Issued: 2/14/2023◆Revised the initial full-year forecast downward, but maintained its plan to increase sales
and profit and also kept dividend the same
Full Fiscal Year: Company Forecast
・At the beginning of the fiscal year, the Company had forecasted full-year sales of 17,300 million yen (+7.5%
YoY), operating profit of 1,530 million yen (+7.9% YoY), net profit of 1,000 million yen (+5.9% YoY), andoperating margin of 8.8% (no change from 8.8% in the previous fiscal year).
・However, although the Enhancement Business performed well, the reallocation of resources in the SI Business
was not enough to catch up to the unexpectedly large change in the corporate clients’ IT investment policies.
Consequently, the Company lowered its forecast for sales by 1,100 million yen (-6.4% compared to the initial
forecast) to 16,200 million yen, operating profit by 110 million yen (-7.2%) to 1,420 million yen, and net profit by
50 million yen (-5.0%) to 950 million yen. The shortage of employees to handle the rapidly increasing,sophisticated DX projects, as well as the delay in their recruitment, seemed to have been a factor behind thisdownward revision.
・There was no revision to the forecasted operating margin of 8.8%. In the revised forecast, although this fiscal
year’s YoY increases in sales and profits are expected to be very small, the Company expects to achieve recordhigh sales and profits in consecutive years.
・By industry, the full-year sales forecast for the financial industry was revised upward (from the initial forecast ⇒the revised forecast; the same order applies hereinafter) from 4,420 million yen ⇒ 4,800 million yen (+380 million
yen or +8.6% from the initial forecast) due to strong orders from banks and insurance companies. Sales forecast
for the distribution industry was also raised upward from 3,550 million yen ⇒ 3,600 billion yen (similarly, +50
million yen or +1.4%). On the other hand, the sales forecast for the transportation & telecommunication industries
was revised downward from 3,910 million yen ⇒ 2,900 million yen (similarly, -1,010 million yen or -25.8%) andthe other industries were also significantly revised down from 5,420 million yen ⇒ 4,900 million yen (similarly, 520 million yen or -9.6%) (Figure 8).
・By business model, the Company revised upward the sales of the Enhancement Business by 70 million yen(+0.6%) compared to the initial forecast, while it revised downward the sales of the SI Business by 1,040 million
yen (-20.2%) and the Digital Business by 130 million yen (-16.7%).
・As for the annual dividend, there has been no change from the plan to raise dividend from 23 yen/share (ordinary
dividend only) in the previous fiscal year to 50 yen/share (ordinary dividend of 26 yen/share + commemorative
dividend of 24 yen/share for the Company’s 50th anniversary) in the current fiscal year.
【Figure 8】Financial Forecast for the Full Fiscal Year
Unit: million yen, %FY 2022

Sales
Gross Profit
Gross Margin
SG&A Expenses(ratio to sales)

Operating Profit(ratio to sales)

Recurring Profit(ratio to sales)

Net Profit

By
Business
Model

By Industry(ratio to sales)

Sales Composition
Finance

FY 2023: Old CE

FY 2023: New CE

A

B

Diff. from Old% Difference
Forecast (amount)
(%)

C=B-A
-1,100C/A

16,100
3,450
21.4%
2,032
12.6%
1,417
8.8%
1,432
8.9%
944
5.9%

17,30016,200

-6.4

1,530
8.8%
1,545
8.9%
1,000
5.8%

1,420
8.8%
1,445
8.9%
950
5.9%

-110

-7.2

-100

-6.5

-50

-5.0

% Difference
(%)
F/D
-900
-5.3

FY 2023: Old E

Diff. in Amount between
Old E and New CE

D

F=B-D
17,100
3,710
21.7%
2,230
13.4%
1,480
7.6%
1,495
7.8%
970
5.3%

-60
1.1%
-50
1.1%
-20
0.6%

-4.1

5.5

-3.3
-2.1

3,909

4,420

4,800

380

8.6

4,550

250

Distribution

3,342

3,550

3,600

50

1.4

3,550

50

1.4

Telecommunication & Transportation

4,285

3,910

2,900

-1,010

-25.8

3,600

-700

-19.4

Other

4,562

5,420

4,900

-520

-9.6

5,400

-500

-9.3

Digital Business

350

780

650

-130

-16.7

750

-100

-13.3

SI Business

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

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

4,645

5,140

4,100

-1,040

-20.2

5,000

-900

-18.0

11,103
8.9%
2.2%
22.0%
20.6%
10.6%
11.8%

11,3807.5%

11,450
0.6%

70
-6.9%

0.6

11,350
6.2%

100
-5.6%

0.9

7.9%
7.8%
5.9%

0.1%
0.9%
0.6%

-7.8%
-6.9%
-5.3%

4.4%
4.4%
2.8%

-4.3%
-3.5%
-2.2%

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

Short Report

7/11

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

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

Issued: 2/14/2023

Full Fiscal Year: Alpha-Win Research Department’s Forecast
・Due to concerns about another outbreak of COVID-19 (the eighth wave) and the uncertainty of the global situation,some companies with deteriorating business performance have been holding down their IT investments. On theother hand, there are many companies with strong financial performance and companies that are more actively
making strategic DX investments (business and process transformation). There seems to be a polarization in IT
investments.
・In this environment, the Company has been strategically strengthening measures to receive orders for systemsrelated projects from the latter group of companies. It has also been shifting to high-profit projects and improving
resource efficiency.
・The Company has generally been seeing no signs of slowdown regarding negotiations or in receiving orders. There
has also been a recovery in demand from the previously stagnant industries such as the financial industry, and theCompany has been receiving more new orders for DX and upstream processes. It also seems to have some leeway
in terms of controlling its results and has a stable, order-receiving business model. Therefore, we had believed thatits downside risk was limited in terms of both sales and profits for this fiscal year.
・In our previous report, we had revised our full-year forecast downward, considering the underachievement of
results in the first half of this fiscal year as well as the Company’s goals for the second half of this fiscal year that
seemed somewhat high for both sales and operating profit. However, the Company’s revised forecast is now lower
than our forecast by 5.3% (900 million yen) for sales and by 2% to 4% (20 million yen to 60 million yen) for eachof the profit. Considering the Company’s downward revision to its full-year forecast, which was mainly due toemployee shortages, we also lowered our forecasts for both sales and profits to the same amount as the Company’s
forecasts.
・Given that the order backlog at the end of Q3 is almost the same level as the expected sales in Q4, as well as theincreasing profitability of especially the Enhancement Business, we believe that the Company’s revised forecasts
are mostly achievable.
・From our previous forecast ⇒ current forecast (same as the Company’s revised forecast), we revised our forecast
for sales from 17,100 million yen (-200 million yen from the Company’s initial plan) ⇒ 16,200 million yen,operating profit from 1,480 million yen (similarly, -50 million yen) ⇒ 1,420 million yen, net profit from 970 million
yen (similarly, -30 million yen) ⇒ 950 million yen, and operating margin from 8.7% (similarly, -0.1%) ⇒ 8.8%
(Figure 8 on page 7).
Medium Term: Forecast
・Over the medium to long term, the Company intends to build a stable and sustainable business foundation throughits proposal-based and contract-based businesses. It also plans to shift its business portfolio to the Digital Businessand the SI Business in which high growth is expected.
・In FY 2024, the final year of the current medium-term management plan, the Company plans to achieve sales ofY19 billion (+Y2.8 billion compared to the Company’s revised sales forecast for the current fiscal year) and an
operating profit of Y1.71 billion (similarly, +Y290 million).
・We have not changed our medium-term outlook for the Company’s financial performance, predicting that IT
investments will continue to be solid in the next fiscal year onward too. We also have not changed our mediumterm forecast of dividend starting next fiscal year (annual increase of +2 yen/share for ordinary dividend).
・However, the Company will most likely start to see the effects of the capital and business alliance with NRI
starting in the next fiscal year, and we plan to review our medium-term financial forecast upon the announcementof this fiscal year’s full-year results.
・In the long term, the alliance is expected to increase the Company’s sales and profit. However, as previously
mentioned, the Company plans to make full-scale investments to strengthen its production facilities and production
system from FY 2024 to FY 2026. After these augmentations, employees and facilities will start full operation, butthere will most likely be a time lag before their full effects start to be seen. Also, the increase in costs is expected
to temporarily cause its profitability and profit growth potential to worsen. Investment in production facilities isplanned to peak in FY 2024, which will be depreciated in FY 2025 from the beginning to the end of the fiscal year.
Since FY 2025 is also when fiscal-year costs related to strengthening the production system will peak, costs are
expected to increase (Figure 1 on page 1).
・Highly specialized IT engineers, such as those with expertise in DX, are competitively in demand across all
Short Report

8/11

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

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

Issued: 2/14/2023

industries. Even if employment terms and compensation are improved, the Company may not be able to hire andretain the necessary number of employees.
・On the other hand, IT investments are expected to continuously increase as customers work on digitalization,building business models for a world coexisting with COVID-19, strengthening their competitive edge, solving
employee shortages, and streamlining and speeding up their operations. In addition, the strengthened alliance with
NRI should have a significant effect. The Company’s growth potential therefore seems to be increasing even further.
・We believe that the Company will be able to continue to stably increase sales and profit at a rate of about 6-10%
per year, on the condition that the economic environment normalizes, through business with NRI, expansion ofbusiness area, acquisition of new customers, and improvement of productivity through various measures.

◆ Stock price and characteristics: domestic-demand-oriented, stable growth stock thathas been significantly outperforming the TOPIX over the long term. The effect of thealliance with NRI will be a key point going forward.
Performance・Over the past approximately 14 years, the Company’s stock has risen by about 5.8x due to its strong financial
performance and has been significantly outperforming the TOPIX (+347%). It has also risen by 7.5% since thebeginning of this year (outperformed the TOPIX by 2.5%) and rose by 3.5% after the announcement of the Q3
results (since the closing price on February 8, 2023) (outperformed the TOPIX by 3.4%). The stock price has beensolid, offsetting the dilution of shares due to the third-party allotment (paid-in amount of 1,010 yen/share; dilution
rate of approx. 8.6%) (Figure C on page 11).
Comparison of Valuation and Financial Performance
・The current average of all companies listed on the TSE Prime is as follows: forecasted P/E of 13.85 (based oncompany forecasts), P/B of 1.17 (based on the actual BPS), and forecasted dividend yield (simple average) of
2.38%. The Company’s valuation is about average in terms of its dividend yield (2.3%) based on its ordinary
dividend, but somewhat high for its P/E and P/B which are 16.57 and 1.87, respectively.
・Compared to its competitors listed on the TSE Prime Market (HIMACS and Toho System Science; see Figure 9),
the Company’s valuation is high and at a premium in terms of the major indicators.
・Its valuation and performance seem to reflect its long-term track record of steady profit growth and relatively low
earnings volatility, as well as the anticipation of positive effects from the alliance with NRI.
・In comparison with NRI with whom it has formed an alliance, the Company’s valuation is low in terms of eachindicator. Going forward, its valuation may gradually rise closer to NRI’s relatively high valuation along withbusiness expansion.
【Figure 9】Comparison of Valuation and Financial Performance with Competitors
Item

Company Name

Stock
Information

Valuation

Results for This
Fiscal Year'sFirst Nine
MonthsFull-Year Resultsfor This Fiscal
Year (company
forecast)

Securities Code(P stands for the TSE Prime Market)
Stock Price (at 2/10/2023 closing)Market Cap (million yen)
P/E (forecasted price-to-earnings ratio)
P/B (price-to-book ratio)
Dividend Yield (%)
EV/EBITDA
P/S (price-to-sales ratio)
Sales (million yen)
Operating Profit (million yen)YoY Sales Growth Rate (%)
YoY Operating Profit Growth Rate (%)
Operating Margin (%)
This Q3's Progress with Sales Compared to FullYear Forecast (%)
Similarly, Progress with Operating Profit (%)
Sales (million yen)
Operating Profit (million yen)YoY Sales Growth Rate (%)
YoY Operating Profit Growth Rate (%)
Operating Margin (%)
NRI's Stake in Each Company (%)

Relationship with
the NRI Group

CUBE SYSTEM(CS: consolidated)

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

Reference: Nomura Research Institute(NRI: consolidated)

All TSE Prime Stocks

2335 P

4299 P

4333 P

4307 P

1,836 companies

1,119
17,62416.57
1.87
4.47 (incl. commemorative dividend) or
2.32 (excl. commemorative dividend)
7.66
1.09
11,972
951
-0.6
-15.3
7.9

1,452
18,024
13.38
1.69

1,030
14,282
12.18
1.48

2.96

3.88

1.52

5.45
1.04
13,025
1,356
6.8
16.2
10.4

3.67
0.93
11,377
1,171
8.1
10.7
10.3

11.84
2.63
516,059
83,873
15.2
3.1
16.3

73.9

75.5

74.4

74.8

67.0
16,200
1,420
0.6
0.1
8.8

75.3
17,250
1,800
3.4
4.9
10.4

78.1
15,300
1,500
7.7
13
9.8

72.9
690,000
115,000
12.8
8.3
16.7

4.90

2.02

-

-

1.51 (before allotment)⇒ 20.18 (after allotment)

2,964
1,812,051
22.76
4.58

1,022.46
716,445,300
13.85
1.17
2.38 (simple average) or
2.52 (weighted average)
Reference Ratios: NRI/CS
43.1
88.2

2.0

42.6
81.0

1.9

Each Company's Stake in NRI (%)

0.01% (68,463 shares held)

No information on securities
report

0.02% (119,790 shares held)--

Each Company's Sales (million yen) to NRI and Their
Proportion to Total Sales (%) in the Previous Fiscal Year8,285 million yen / 51.5%

6,248 million yen / 37.5%

3,800 million yen / 26.7%--

Number of Directors and Officers from NRI

3 (president, 1 internal director, and 1
external director)

-

-

0

0

(Note) Prepared by Alpha-Win Research Dept. based on each company's financial results summary.
Market cap= (shares outstanding) x (market share price [at 2/10/2023 closing])
The companies' planned EPS values for FY 2023 were used in all P/E calculations. Actual BPS values of Q3 FY 2023 were used in P/B calculations.
EV/EBITDA = (market cap + interest bearing debt - cash & deposits)/(operating profit + depreciation + intangible fixed asset amortization, etc.)
Interest bearing debt and cash & deposits are actual values of Q3 FY 2023. Operating profit, depreciation, and intagible fixed asset amortization, etc., are values forecasted for this fiscal year by each company or calculated for the full year based on Q3.
P/S=market cap / sales [the companies' forecasts for FY 2023]
Relationship with the NRI Group: NRI's stake in each company (in terms of shares outstanding excluding treasury shares) is as of the end of December 2022 for CS and as of September 2022 for the other companies. All other figures are as of the end of March 2022.

Short Report

9/11

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

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

Issued: 2/14/2023

Stock Price Outlook
・Factors that will likely affect the Company’s stock price in the future include the following: the effect of thealliance with NRI (its impact on earnings in the next fiscal year and beyond); trends in IT investments by the enduser companies (the level of orders received and the order backlog); progress with increasing employees, which
has been the Company’s bottleneck (the number of mid-career and new-graduate employees that are newly hired
and the total number of employees); and the measures to return profit to shareholders (level of dividend, sharebuybacks, and stock splits).
・We believe that if the Company continues to show a stable profit growth at a nearly double-digit annual rate as adomestic-demand-oriented, defensive, small-cap, and stable growth stock, then its stock price may rise over the
medium to long term in line with P/E level corrections and the increase in EPS.

【 2335 CUBE SYSTEM

Sector: Information & Communication 】 Figure A

FY

2020
2021
2022
2023
2023
2023
2023
2023
2023
2024

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)

Mid-Term Plan: Initial CE
Old CE
New CE
Initial E
Old E
New E
Mid-Term Plan: Initial CE

14,70814,78816,09917,20017,30016,20017,20017,10016,20018,500

2.7
0.5
8.9
7.5
0.6
6.8
6.2
0.6
7.6

959
1,174
1,417
1,340
1,530
1,420
1,520
1,480
1,420
1,480

4.1
22.5
20.7
7.9
0.1
7.3
4.4
0.1
10.4

2024

Mid-Term Plan: Revised CE

19,000

9.8

1,710

11.8

2024
2025
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023

E
E
Q1
Q1
Q2
Q2
Q3
Q3
Q4
Q4 CE
Q3 YTD
Q3 YTD

18,70019,600
3,987
3,892
4,073
4,000
3,981
4,080
4,058
4,228
12,041
11,972

15.4
4.8
18.2
-2.4
9.8
-1.8
13.5
2.5
-3.3
4.2
13.7
-0.6

1,700
1,800
378
272
368
326
376
353
295
469
1,122
951

19.7
5.9
56.5
-28.1
18.7
-11.1
56.7
-6.1
-22.8
58.9
41.7
-15.3

976
1,295
1,432

1.7
32.7
10.6

525
844
944

-11.9
60.7
11.9

38.69
62.11
69.82

411.96476.52531.14

18.0
20.0
23.0

1,545
1,445
1,535
1,495
1,445

7.8
0.9
7.2
4.4
0.9

1,000
950
1,000
970
950

5.9
0.6
5.9
2.8
0.6

73.91
67.53
74.08
69.73
67.53

Not disclosed

50.0
50.0
50.0
50.0
50.0

Not disclosed

585.46565.30595.69(YoY change is the comparison with FY2023's Mid-Term Plan: Initial CE)(Operating margin of 9.0% and ROE of 13% or more)(YoY change is the comparison with FY2023's Old CE)

1,715
1,820
390
271
362
323
381
359
299
492
1,133
953

18.7
6.1
57.1
-30.5
2.0
-10.8
19.4
-5.8
-19.8
64.4
22.9
-15.8

1,100
1,180
262
173
239
215
254
240
189
322
755
628

15.8
7.3
59.0
-34.0
1.7
-9.5
29.6
-5.4
-23.8
70.3
26.6
-16.8

72.55
77.83
19.4
12.8
16.8
15.9
18.8
17.5
14.0
21.3
55.8
45.8

618.24668.07487.51
543.58509.03556.76531.14597.49531.14531.14597.49

28.0
30.0
0.0
0.0
8.0
23.0
8.0
23.0
15.0
27.0
8.0
23.0

(Note) CE: the Company’s forecast/estimate. Old CE: the Company’s previous forecast/estimate. New CE: the Company’s current,
revised forecast/estimate. “Mid-Term Plan: Initial CE” is the company forecast announced on June 11, 2021. “Mid-Term Plan:
Revised CE” is the company forecast announced on May 11, 2022.
E: Alpha-Win Research Dept.’s forecast/estimate. Initial E: Alpha-Win Research Dept.’s initial forecast/estimate. Old E:
Alpha-Win Research Dept.’s previous forecast/estimate. New E: Alpha-Win Research Dept.’s current forecast/estimate.
Q1: Apr-June. Q2: July-Sept. Q3: Oct-Dec. Q4: Jan-Mar. Q3 YTD: Apr-Dec.

【 Stock Price and Valuation Indicators: 2335 CUBE SYSTEM 】 Figure B
Item

2/10/2023

Item

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)1,119Last FY (actual)

16.0

2.1

2.1%

32.2%

Shares Outstanding (thou.)

15,750This FY (est.)

16.6

1.9

4.5%

74.0%

Market Capitalizatoin (million yen)

17,624

Next FY (est.)

15.4

1.8

2.5%

38.6%

Dilutive Shares (thou.)0

Equity Ratio at End of This FY's Q3

77.3%

Last FY's ROE

13.8%(Note) Estimates were made by Alpha-Win Research Dept. Shares outstanding are the total amount after the third-party allotmentof new shares.

Short Report

10/11This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this Report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this Report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 2/14/2023【 Stock Chart (end-of-week prices): 2335 CUBE SYSTEM 】 Figure C
(Y)
1,500
1,400
1,300

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

1,200
1,100
1,000
900
800
700
600
500
09
/1
6
02
/1
7
07
/1
7
12
/1
7
05
/1
8
10
/1
8
03
/1
9
08
/1
9
01
/2
0
06
/2
0
11
/2
0
04
/2
1
09
/2
1
02
/2
2
07
/2
2
12
/2
2

400

(Note) From the first week of September 2016 to the second week of February 2023

2.00
1.90
1.80
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
(M
M
/Y
Y)

1,600

【Performance】
PeriodReturn vs. TOPIX
1 month1.8%
1.2%
3 months
10.0%
10.0%
6 months
7.2%
6.0%
12 months
21.1%
15.8%
(Note)
・Reflects stock and index prices through theclosing price on 2/10/2023. “Vs. TOPIX” is therelative value after subtracting the TOPIX’s
performance from the performance of theCompany’s stock.
・Performance for the 1-month period is thecomparison between the closing price on thelast day of January and the closing price on
2/10 (similarly compared for the other periods).

＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

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
without notice. For the latest (updated) report, please see our website (http://www.awincap.com/). We also 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.
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. SV2023-02-14-1800

Short Report

11/11

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.