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

Issued: 8/6/2018

Research Dept., Alpha-Win Capital Inc.
http://www.awincap.com● Flash Report on Performance◆ Major Player as a Specialist of Enterprise System Software; Financial Results
Recovering in a V-shaped Curb
・PCA (the Company, hereinafter) sells and provides maintenance service for originally developed,packaged business software (for accounting, sales management, purchase and inventory management,payroll, HR, etc.) to mainly small- and medium-sized companies.
・In recent years, the Company has been focusing on providing cloud-based versions of its software andon making its business more rational. Financial results have been recovering in a V-shaped curb. Thisfiscal year, the Company plans to achieve an increase in sales for the fourth consecutive year as well as
record-high sales. A medium-term business plan is planned to be announced in November.

◆ For This Fiscal Year’s First Quarter Financial Results, Large Profit Decrease Due toUpfront Investment Cost but Strong Fundamentals
・The Company’s first quarter (Q1, hereinafter) financial results for FY 2019 (March-ending) were as
follows: Y2,346 mil in sales (+11.3% YOY), Y57 mil in operating profit (-67.1% YOY), Y69 mil inrecurring profit (-62.3% YOY), and Y34 mil in net profit (-64.6% YOY). At first glance, there is a large
decrease in profit. However, since this decrease was for a positive reason – upfront investment for thedevelopment of next-generation products – and since sales are growing faster than expected,
Alpha-Win’s Research Department (our Research Department, hereinafter) has judged that thefundamentals are still strong.
・Sales increased YOY in each category (classified by type of sales into five categories), owing to efforts
to strengthen products and marketing, recovery of the financial performance of Japanese companies ingeneral, investment comeback in the information services industry, and demand for PC replacements. In
total, sales increased by Y238 mil YOY, of which approximately 50% is from the cloud service and 34%
is from other revenue (Figure 1: each figure has been prepared by our Research Department based on thefinancial results summary and other materials – the same applies to all figures that follow). Sales foreach sales type are as follows:
1. Sales of the maintenance service were Y788 mil (+0.5% YOY), contributing the most to total sales(33.6%). While its growth rate continues to be low, it is a stable source of profit.
2. Cloud service posted Y544 mil in sales (+28.3% YOY), with accelerating sales growth. Quarterly
sales are linearly increasing without seasonal variation compared to the quarter just before, changing
from last fiscal year’s Q1:424 (Y mil; the same for the rest) ⇒ Q2:447 ⇒ Q3:475 ⇒ Q4:508 ⇒ thisfiscal year’s Q1:544. Increased membership, rather than increased price per contract, has beencontributing to the rise in sales. In fact, about 200 companies seem to be joining as new members
every month. In January 2018, the membership of the cloud service reached 10,000 companies, andabout 1,200 additional companies are estimated to have joined by the end of July. The cloud service
is contributing largely to profit with its sales increase and high profitability.
3. Other operating revenue posted Y439 mil in sales (+22.5% YOY). The solutions business andinstallation service related to the Work Style Reform contributed to this high sales increase rate.
4. Sales steadily increased for both the products (conventional software) and the goods (business forms,etc.), with Y394 mil for the products (+6.4% YOY; 16.8% of total sales) and Y179 mil for the goods
Performance Report

1/4This Alpha-Win Company Research Report (this Report, hereinafter) has been prepared by Alpha-Win-Capital Inc. (Alpha-Win, hereinafter) 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, orfit for any purpose and do not accept any responsibility or liability.
Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or reliance on this Report. Investors who read this report must
make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may
be copied, photocopied, cited, or translated without our consent.

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

Issued: 8/6/2018(+5.7% YOY; 7.6% of total sales). The subsidiary Xronos Inc.’s labor management system has been
continuing to be successful, with a nearly 20% YOY growth in sales (actual value not disclosed).
・Driven by the success of the cloud business, sales largely increased. However, due to strategic and active
upfront investment, gross margin decreased by 3.9 points YOY to 54.9%. This Q1 result is below theCompany’s full-year goal for this fiscal year’s gross margin, which is 55.5% (55.8% by our Research
Department’s prediction). Intentionally raised spending, such as subcontractor costs, related tonext-generation product development (including ERP- and cloud-related products) caused thisunderachievement. Similarly, mainly because of greater R&D cost, SG&A expense increased by Y166
mil YOY. Because of the lower gross margin and higher SG&A expense, operating margin decreased,leading to a large drop in each of the profits.
・The Q1-end balance sheet had not largely changed, but cash and deposits decreased due to the paymentof expenses (last fiscal year’s Q1 ⇒ this fiscal year’s Q1: Y7,268 mil ⇒ Y6,862 mil). On the contrary,investments and other assets increased (the same order: Y2,689 mil ⇒ Y3,230 mil). The Company’s
finance is sound, as indicated by its equity ratio of 65.3% and abundant liquidity in hand. The abundantliquidity can be inferred from the ratio of cash and deposits to the planned sales or total assets for thisfiscal year, which is 65.4% and 40.3%, respectively.
[Figure 1]
Q1 Financial Results(unit: Y mil, %)Consolidated Sales
Sales Classification byTypeProductｓGoods
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Profit
Gross Margin (% of sales)

SG&A Expense
SG&A Ratio (% of sales)

Operating Profit
O.P. Margin (% of sales)

Net Profit
N.P. Margin (% of sales)

FY 2018 Q1

FY 2019 Q1

Apr-June 2017 Apr-June 2018
2,108
2,346371
394
169
179783788424544
359
439
1,238
1,287
58.7
54.9
1,063
1,229
50.4
52.4
175
57
8.3
2.4
9834
4.6
1.4

ChangeChange% of Sale s(rate)(amount)
Increase
YOY: % YOY: Y mil
%
11.3
238
100.0
6.4
23
9.7
5.7
10
4.2
0.5
5
2.1
28.3
120
50.4
22.5
80
33.6
4.0
49
-3.9
15.6
166
2.0-67.1-118-5.9-64.6-64-3.2-% of Total
Sales%
100.0
16.8
7.6
33.6
23.2
18.7
-◆ Current Progress Rate with Respect to the Financial Forecast
・The Company has not disclosed a mid-year financial result forecast for this fiscal year. The progress rate
as of Q1 in terms of this fiscal year’s full-year financial forecast made by the Company is 22.4% forsales and 6.9% for operating profit. For the same period during last fiscal year, the Q1 progress rate withrespect to the full-year financial result was 21.5% for sales and 21.7% for operating profit. Since thesimple average of the Q1 sales progress rates for the past six years including last fiscal year is similarly
21.1% (not available for operating profit due to the posting of a loss in Q1 during several fiscal years),
and the Company plans to increase full-year sales by 7.2%, sales itself seem to be growing steadily.
・Since the decrease in profit was caused by upfront investment costs and was expected, the Company has
not changed its full-year forecast for sales and profits. Sales are expected to continue to firmly makeprogress after Q1 mainly in the cloud and the labor management system (classified under “products”).
・Our Research Department expects the annual goal for profit to be achievable since the fundamentals arestrong with Q1 sales growing at a slightly higher rate than expected, especially with the cloud and otherrevenue. Also, we expect that, in the end, the Company should be able to control its costs to achieve its
goal for profit. For these reasons, we have not made any revision to this fiscal year’s financial forecast at
this point. Also, our Research Department expects that the annual EPS growth rate will be 5-6% over themedium term under the assumption that upfront investment costs will continue to be present.
Performance Report

2/4This Alpha-Win Company Research Report (this Report, hereinafter) has been prepared by Alpha-Win-Capital Inc. (Alpha-Win, hereinafter) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability.
Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or reliance on this Report. Investors who read this report must
make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may
be copied, photocopied, cited, or translated without our consent.

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

Issued: 8/6/2018◆ Stock Price
・The Company has been underperforming the TOPIX for the past month or so. Compared to the averageof the first section of the TSE (based on closing prices of 8/6/2018: approx. 15 for P/E, 1.3 for P/B, and1.7% for dividend yield based on a simple average), the Company’s values are relatively cheap except
for the P/E. The Company’s indicators are also cheaper than its competitors Obic Business Consultants
and Miroku Jyoho Service in terms of all the major indicators such as P/E, P/B, dividend yield,
EV/EBITDA, and P/S, as shown below (Figure 2).
[Figure 2] Comparison of Valuation Indicatorswith Compe titors / Company Name

PCA (consolidated)

Obic Business Consultants(OBC: non-consolidated)

Miroku Jyoho Service(MJS: consolidated)

Code9629

4733

9928

Stock Price (at 8/6 closing)

1,584

9,050

2,433

Market Cap (Y mil)

12,197365,186

84,684P/E (price-to-earnings ratio)

18.4

39.8

29.4

P/B (price-to-book ratio)

1.0

3.2

4.7

Dividend Yield (%)

2.0

0.9

1.2

EV/EBITDA

3.2

27.7

16.0

P/S (price-to-sales ratio)

1.2

14.6

2.8

Market cap = (shares outstanding) x (market share price [at 6/29 closing]),
EV/EBITDA = (market cap + interest-bearing debt - cash & deposits) / (O.P. + depreciation cost +intangible fixed asset amortization)
P/S = market cap / sales [the Company's estimate for FY 2019], The Company's estimated EPS for FY 2019 used in all P/E calculations【 9629 PCA

Sector: Information & Communication 】

FY2016
2017
2018
2019
2019
2020
2021
2018
2019

Full-year
Full-year
Full-year
Full-year, CE
Full-year, E
Full-year, E
Full-year, E
Q1
Q1

Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPSDividend(Y m il)（ %）(Y mi l)（ %）(Y m il)（ %）(Y mi l)

（ %）

(Y )

(Y )

（Y ）

8,440
9,360
9,785
10,486
10,40011,00011,680
2,108
2,346

3.3
10.9
4.5
7.2
6.3
5.8
6.2
5.6
11.3

174.1
33.5
35.9
5.8
5.5
―
-64.6

-13.70
23.49
64.37
85.95
87.50
92.60
97.60
14.37
5.09

1,567.18
1,568.59
1,644.39―
1,701.09
1,762.95
1,829.80
1,579.92
1,624.6940432807
825
850
900
950
175
57957.9
86.8
2.2
5.3
5.9
5.6
626.2
-67.1

66463
834
842
875
925
975
185
69593.6
79.9
0.9
4.9
5.7
5.4
435.0
-62.3

-93
160
441
588
600
634
669
98
34

31.0
31.0
31.0
31.0
31.0
31.0
31.0
――(Note) CE = the Company’s estimate; E = estimate by Alpha-W in’s Res earch Dept. Q1 (first quarter) is from April to June.
All fiscal years (FY) discussed in this document are M arch-ending.

【 Stock Price and Valuation Indicators: 9629 PCA 】
Item

as of 8/6/2018

Item

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)1,584Last FY (actual)

24.6

1.02.0%48.2%

Shares Outstanding (thou.)

7,700This FY (est.)

18.1

0.9

2.0%

35.4%

Market Capitalization (Y mil)

12,197

Next FY (est.)

17.1

0.9

2.0%

33.5%

Last FY’s ROE

3.9%

Dilutive Shares (thou.)

0Equity Ratio at Last FY-End

65.0%(Note) Estimates were made by Alp ha-Win’s Research Dep t.

Performance Report

3/4This Alpha-Win Company Research Report (this Report, hereinafter) has been prepared by Alpha-Win-Capital Inc. (Alpha-Win, hereinafter) 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, orfit for any purpose and do not accept any responsibility or liability.
Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or reliance on this Report. Investors who read this report must
make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may
be copied, photocopied, cited, or translated without our consent.

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

Issued: 8/6/2018【Performance】
Return vs. TOPIX
Period1 month-10.3%-11.5%
3 months
-8.3%
-7.0%
6 months
-8.5%
-4.1%
4.2%
-3.8%
12 months(Note) Stock price and index as of the end of July 2018

Disclaimers
This Alpha-Win Company Research Report (this Report, hereinafter) has been prepared by
Alpha-Win-Capital Inc. (Alpha-Win, hereinafter) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not
be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on allinvestment matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis ofgenerally accessible public information and supplemental information including interview(s) by theanalyst. 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, the stock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject 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.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied,photocopied, cited, or translated without our consent.
For inquiries regarding this Report, please send us an e-mail to info@awincap.com. However, Alpha-Win
and the writer of this Report do not have any obligation to reply to inquiries. V20181029

Performance Report

4/4This Alpha-Win Company Research Report (this Report, hereinafter) has been prepared by Alpha-Win-Capital Inc. (Alpha-Win, hereinafter) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability.
Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use 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.