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

Issued: 8/3/2020

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

2019/8/1● Flash Report on Financial Performance◆ A major specialized player in enterprise system software; taking a lead in the cloudbusiness as No. 1 in the industry
・PCA CORPORATION (hereinafter referred to as the "Company") sells originally-developed, packaged businesssoftware (for accounting, sales management, purchasing and inventory management, payroll, human resources,
labor management, etc.) mainly to small- and medium-sized companies as on-premises or via the cloud. It also
provides related maintenance services. Its mission is to contribute to society as a “Management Support Company”
that supports other companies conduct smooth management and operation. It is taking a lead in the cloud-based
business software industry as No. 1 in the industry (PCA Cloud). Going forward, it plans to make a further transition
to the subscription business.
・In recent years, thanks to the transition to a subscription-based business model and the event-driven, high market
demand, the Company’s financial performance has been excellent. Last fiscal year (FY 2020; note that theCompany’s fiscal year is March-ending, so FY 2020 ended in March 2020), it achieved sales growth and profit
growth for the fifth consecutive year as well as record-high profit.

◆ This fiscal year’s Q1 results: no surprise – sales and profits seem to have slightly
exceeded the Company’s plan but had both decreased due to the recoil after the eventdriven high demand and the COVID-19 crisis
・In the first quarter of FY 2021 (Apr-June 2020; hereinafter, Q1 = Apr-June), the Company achieved sales of Y2,789
million (-9.2% YoY), operating profit of Y465 million (-20.7% YoY), recurring profit of Y471 million (-21.2%
YoY), and net profit of Y272 million (- 25.1% YoY). Faced by a recoil following last fiscal year’s great success withthe event-driven high demand, sales and profits both decreased (Figure 1).
・However, sales and each of the profits are still high compared to the past Q1 results. Last fiscal year’s Q1 results
were at a high level due to the high demand caused by the consumption tax revision and the end of support for
Windows 7, and this fiscal year’s results are being impacted by the COVID-19 crisis. Considering these factors, therates of decline in sales and profits seem to have been kept low. Due to uncertainties over the impact of COVID-19,
many companies listed on the First Section of the TSE have not announced their financial forecasts for the current
fiscal year, or have disclosed forecasts upon the announcement of Q1 results that full-year sales and profits will
decline significantly, net losses will be posted, and dividend will be reduced or not be paid at all. In contrast, theCompany’s financial performance seems to be relatively solid.
・The factors behind this Q1’s sales decline can be summarized into (1) the recoil from the event-driven high demandand (2) the COVID-19 impact. On the other hand, the cloud business, which the Company has been focusing on, andstrategic products such as its subsidiary Xronos’s labor management system related to the working style reform havecontinued to be successful.
[Figure 1] Q1 Results and Full-Year Plan
Q1 Results
Unit: million yen

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

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

Q1 FY 2020
Apr-June 2019
3,073
652
102
865
764
688
1,868
60.8
1,281
41.7
587
19.1
364
11.8

Q1 FY 2021
Apr-June 2020
2,789
307
77
899
957
546
1,756
63.0
1,290
46.3
465
16.7
272
9.8

% Change
Difference% of Total Sales FY 2021 Full-Year Company Plan % Change
YoY: %
YoY: million yen%
Apr 2020 - Mar 2021
YoY: %
-9.2
-284
100.0
13,280
-6.9
-52.9
-345
11.0
2,539
-19.8
-24.4
-25
2.8
445
-19.4
4.0
34
32.2
3,388
-2.4
25.2
193
34.3
4,019
19.1
-20.6
-142
19.6
2,889
-21.9
-6.0
-112
8,019
-6.7
2.2
60.4
0.7
9.0
5,985
2.9
4.6
45.1
-20.7
-122
2,034
-26.9
-2.4
15.5
-25.1
-92
1358
-25.2
-2.1
10.2

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary

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

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

Issued: 8/3/2020

・Of the total decrease in sales of Y284 million, decline in sales of products accounted for Y345 million and otheroperating revenue accounted for Y142 million. On the other hand, sales of maintenance increased slightly by Y34
million, while the sales of cloud service increased by Y193 million.
・Sales by category (sales categories defined by the Company) were as follows:
1. Sales of the products (conventional packaged software: on-premises) were largely impacted by the recoil fromthe high demand for replacement by users of stand-alone software. Consequently, from last Q1 ⇒ this Q1 (thesame order applies below), sales decreased by half from Y625 million ⇒ Y307 million (-52.9% YoY; percent
of total sales changed from 21.2% ⇒ 11.0%). Of all the categories, this category experienced the largest rateof drop in sales and was the most responsible factor for the overall sales decline. It was most likely the most
responsible factor for the profit decline as well.
2. With the continued trend of going paperless through digitalization, sales of merchandise (ledger sheets, etc.)
decreased from Y102 million ⇒ Y77 million (-24.4% YoY; 3.4% ⇒ 2.8% of total sales).
3. Maintenance service, which accounted for 32.2% of total sales this Q1 (last Q1: 28.1%), has always been a stablesource of revenue. Thanks to contracts remaining from the previous fiscal year and the acquisition of new
maintenance contracts, sales were solid and increased by 4.0% YoY, from Y865 million ⇒ Y899 million.
4. By category, sales of the maintenance service had been the largest, but this Q1, sales of the cloud service beatthis and became the largest for the first time (24.9% ⇒ 34.3% of total sales). In the order of Q1 of the year
before the previous ⇒ last Q1 ⇒ this Q1, the cloud service’s sales increased from Y544 million ⇒ Y764
million ⇒ Y957 million. Its growth has somewhat slowed down compared to the past (growth rate: 28.3% ⇒40.3% ⇒ 25.2%), but this category is still continuing to show a high growth. As a result, the percent of salesof the subscription-based business (the cloud and maintenance services) over the total increased significantly
from last Q1’s 53% to 66.5%. Also, as shown in Figure 2, quarterly sales have been continuously increasing
YoY and QoQ regardless of seasonal variations. The number of users of the cloud service (all current users) has
been steadily increasing, reaching 12,313 companies in March 2019 and 14,388 companies in March 2020 (thenumber of users as of the end of June 2020 has not been disclosed). The Company seems to be gaining new users
at a net rate of 130-140 companies per month, which is a somewhat slower pace compared to the past when the
Company was gaining 150-170 companies per month. However, despite concerns about the impact of COVID19, the Company has been steadily increasing the number of users, which has helped support its overall sales.
Since this business is highly sustainable and has a high marginal profit ratio, it has mostly likely been contributing
significantly to the profits as well.
5. Sales of other operating revenue decreased largely from Y688 million ⇒ Y546 million (-20.6% YoY). Sales
decreased because of difficulties in providing on-site implementation support service for various systems(through the consolidated subsidiary KEC) due to COVID-19. Another reason is that since the other companies’
products are mostly sold in combination with the Company’s products, their sales are highly linked to theCompany’s products.
[Figure 2] Quarterly Change in Sales of the Cloud Business
1,200

45.0
Sales of cloud (left axis: million yen)

% of total sales (right axis: %)40.0

YoY growth rate (right axis: %)
1,000

35.0
800

30.0
25.0

600
20.0
400

15.0
10.0

200
5.0
0

0.0
Q1

Q2

Q3

FY 2017

Q4

Q1

Q2

Q3

FY 2018

Q4

Q1

Q2

Q3

FY 2019

Q4

Q1

Q2

Q3

FY 2020

Q4

Q1
FY
2021

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary

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

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

Issued: 8/3/2020

・Regarding profit, since the Company’s business model has a high marginal profit ratio, fluctuations in sales greatly
affect the profit margins and the amount of change in profit. In addition, due to the sales growth of the highly
profitable cloud business and the consequent rise in its percent over the total sales, the product mix was improved
and the cost of sales was reduced. As a result, the gross margin improved from 54.9% in the Q1 of the year before
the previous to 60.8% last Q1 and then to 63.0% (+2.2% YoY) this Q1. Since sales declined while the SG&A
expenses stayed about the same, having increased only by Y9 million or 0.7% YoY, the SG&A expenses ratio
worsened by 4.6% from 41.7% ⇒ 46.3%. The Company has been continuing to cut down its general expenses, but
expenses related to COVID-19 countermeasures, the rise in personnel expenses, and upfront investment costs seemto have caused this change. Consequently, the operating margin fell by 2.4% from 19.1% to 16.7%. Q1’s operating
margin, though, was greater than the Company’s full-year forecast of 15.3%. With no significant non-operating
profit/loss or extraordinary profit/loss posted, the decline in operating profit caused net profit to decrease.
・There were no significant changes in the balance sheet as of the end of this Q1 compared to the same period of theprevious fiscal year. The profit growth helped increase the cash and deposits (from last Q1 ⇒ this Q1: Y8,134
million ⇒ Y10,176 million) and the net assets (Y12,375 million ⇒ Y13,824 million in the same order). The ratio ofcash and deposits over this fiscal year’s forecasted sales or the total assets was 76.6% (equivalent to 9.2 months ofaverage monthly sales) or 46.6%, respectively. Clearly, the Company has ample liquidity on hand. Its financial
standing is also firm, with an equity ratio of 62.7% and current ratio of 269.9%.

◆ Progress Against Financial Forecast and Forecast for This Fiscal Year and Onward
・The Company has announced its full-year financial forecast for this fiscal year. It is expecting sales of 13,280(+6.9% YoY), an operating profit of 2,034 (-26.9% YoY), a net profit of 1,358 (-25.2%), and ordinary dividend tobe kept at 34 yen. Forecast for H1 has not been disclosed. Q1’s progress rate against the Company’s full-year forecast
was 21.0% for sales (as reference, last Q1 was 21.5%, the Q1 of the year before the previous was 20.5%, and thesimple average of the past 15 years’ Q1 is 21.6%) and 22.9% for operating profit (in the same order, 21.1%, 4.6%,
and not available since there were a few fiscal years with a net loss), which are about the same as last fiscal year.
・The Q1 results seem to have somewhat exceeded the Company’s rather conservative forecast (not disclosed; it has
always tended to be conservative), but since the contribution of Q1 to the full-year results has always been small andthe H2 situation still needs to be carefully evaluated, the full-year forecast has not been changed.
・Although the products and other operating revenue will most likely be especially hit by the recoil from the eventdriven high demand, we believe that the subscription-based business (cloud + maintenance) with high profitability
and sustainability will continue to grow so that financial performance in Q2 (June-Aug 2020) will again mostly be
as expected. However, the second wave of the COVID-19 outbreak has been graver than expected in Japan and has
become the largest risk factor to the Company’s financial performance in Q3 (Sept-Dec 2020) and onward. If thesituation becomes prolonged, although with some time lag, the Company will most likely be affected in terms of
new negotiations, sales expansion of new products, and operation efficiency.
・Even if sales end up being somewhat short of the plan, we believe that the possibility of a large, downward revisionin full-year profit should be small since the subscription-based business will most likely continue to support theoverall financial performance and there seems to be potential for further cost control. Therefore, we have predictedthat the profits will be about the same as the Company’s forecast.
・This fiscal year, due to the recoil from the event-driven high demand and the COVID-19 impact, a temporary profit
decline is inevitable. However, since the subscription-based business will likely continue to be a stable driver of highgrowth, especially with the cloud service, we believe that the annual EPS growth rate will be 8-10% over the medium
term based on normalized figures after the event-driven high demand. Also, medium- to long-term positive financial
performance may lead to the enhancement of shareholder return such as dividend hikes, flexible buybacks of shares,
and stock splits.

◆ Recent Topics
・As measures against COVID-19, the Company has been improving its employees’ work-from-home environment(about 70% of the entire company and nearly 100% of the system development and verification divisions work fromhome), postponing negotiations/seminars/events, shifting them online or to web seminars, and improving the callcenter and support system (planning to make remote work possible by this year’s fall).
・The software subscription service (PCA Subscription: service where the Company's software can be used for a fixedprice per period) has become available starting in May 11 and two options for PCA Accounting Hyper targeting midtier companies (Receivables Management Option and Debt Management Option) has been released on July 22. Both
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The Alpha-Win Company Research Report (hereinafter “this report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisreport for the purpose of providing a description of the company. This report is not to be construed as a recommendation or solicitation of investment. Contents of this report are based on information
current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this report is accurate, reliable, complete, appropriate, or fit for any
purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use 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 thisreport belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 8/3/2020

are new businesses and products, and they seem to be facing a slow start due to COVID-19.
・Since this fiscal year is the Company’s 40th anniversary, in celebration, it plans to grant shares to all employees
from a part of its treasury shares through the Employee Stock Ownership Plan (40 shares per person; a total of approx.
17,000 shares or Y67 million; equivalent to 0.22% or 1.63% of all outstanding or treasury shares, respectively). The
aim is to raise its employees’ awareness of being involved in company management through the possession of theCompany’s shares as well as sharing the rise in shareholder value over the medium to long term with its shareholders.

◆ Stock Price
・ The Company’s stock is seen as a defensive, domestic-demand-related, and small-cap growth stock with asubscription-based business. In recent years, it has been significantly outperforming the TOPIX. Although there wasseemingly no surprise with the Q1 results, the Company’s stock price had continued to rise since around theannouncement of the Q1 results even as the market continued to face a downturn and has been outperforming themarket in the most recent period as well.
・Due to the difficulty in comparing valuation with the average of the First Section of the TSE (since many companies
still have not disclosed their financial forecast), we compared the Company with its competitors Obic Business
Consultants and Miroku Jyoho Service. Excluding dividend yield and P/S, the major indicators – this fiscal year’s
forecasts for P/E, P/B, and EV/EBITDA – show that the Company’s valuation is low compared to the two competitors.
Since the rate of decline (YoY) in operating in profit in Q1 was also the smallest, the Company’s valuation seems tostill be relatively cheap (Figure 3). We should continue to take note of the Company’s progress as a stable, mediumto long-term growth stock.
[Figure 3] Comparison of Valuation with Competitors
Company Name

PCA (consolidated)

Obic Business Consultants(OBC: non-consolidated)

Miroku Jyoho Service(MJS: consolidated)

Code
Stock Price (at 7/31 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)
This FY's Q1: YoY Sales Growth Rate (%)
This FY's Q1: Operating Profit Growth Rate (%)

9629

4733

9928

4,570
35,189
22.4
2.2
0.7
8.1
2.6
-9.2
-20.7

6,190
499,558
50.8
3.9
0.8
29.5
16.4
-12.8
-24.1

2,122
73,859
28.1
3.5
1.8
9.7
2.1
-7.6
-32.6

Market cap = shares outstanding x market stock price [at 7/31 closing]
The companies' estimated EPS values for FY 2021 were used in all P/E calculations. BPS values used in P/B calculations reflect this FY's Q1 results.
EV/EBITDA = (market cap + interest-bearing debt - cash & deposits) / (O.P. + depreciation + intangible fixed assets)
Note: Interest-bearing debt and cash & deposits reflect Q1 FY 2021 results
P/S = market cap / sales [the companies' estimate for FY 2021](Ref) Prepared by Alpha-Win Research Dept. based on each company’s securities report and stock data

 9629 PCA
FY
2018
2019
2020
2021
2021
2022
2023
2018
2019
2020
2021

CE
E
E
E
Q1
Q1
Q1
Q1

Sector: Information & Communication  Figure A
Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPS

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

（%）

(Y )

(Y )

（Y ）

174.1
105.5
100.4
-25.2
-25.1
8.1
10.9
―
-64.6
945.3
-25.1

64.37
133.25272.92204.70204.36220.89244.94
14.37
5.09
54.76
40.99

1,644.39
1,789.76
2,027.42
2,177.77
2,364.67
2,575.60
1,579.92
1,624.69
1,848.46
2,029.56

31.00
31.00
54.00
34.00
34.00
34.00
36.00
―
―
―
―

9,785
11,43914,266
13,28012,84013,50014,300
2,108
2,346
3,073
2,789

4.5
16.9
24.7
-6.9
-10.0
5.1
5.9
5.6
11.3
31.0
-9.2

807
1,248
2,781
2,034
2,050
2,215
2,460
175
57
587
465

86.8
54.7
122.8
-26.9
-26.3
8.0
11.1
626.2
-67.1
917.5
-20.7

834
1,277
2,808
2,055
2,060
2,230
2,470
185
69
598
471

79.9
53.0
119.9
-26.8
-26.6
8.3
10.8
435.0
-62.3
754.6
-21.2

441
906
1,816
1,358
1,360
1,470
1,630
98
34
364
272

Dividend(Note) CE: the Company’s forecast/estimate. E: Alpha-Win Research Dept.'s forecast/estimate. Q1: Apr-June.

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

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

Issued: 8/3/2020【 Stock Price and Valuation Indicators: 9629 PCA 】 Figure B
Item

7/31/2020

Item

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)4,570

Last FY (actual)

16.7

2.3

1.2%

19.8%

Shares Outstanding (thou.)

7,700This FY (est.)

22.4

2.1

0.7%

16.6%

Market Capitalization (million yen)

35,189Next FY (est.)

20.7

1.9

0.7%

15.4%

Dilutive Shares (thou.)

58.7% Last FY's ROE

Equity Ratio at Last FY-End

0

14.3%

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

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

Figure C

(Y)

5.00

6,400

Stock price (left axis)

5,900
5,400

4.50

Price relative to TOPIX (right axis)

4,900

4.00

4,400

3.50

3,900

3.00

3,400
2,900

2.50

2,400

2.00

1,900

1.50

1,400

(M 0
M
/Y
Y
)

/2

0

(Note) Reflects stock price and index
values through the closing price on
7/31/2020.

05

9

/2

02

9

/1

11

9

/1

08

9

/1

05

8

/1

02

8

/1

11

8

/1

08

8

/1

05

7

/1

02

7

/1

11

7

/1

08

7

/1

05

6

/1

02

6

11

08

/1

1.00

/1

900

【Performance】
PeriodReturn vs. TOPIX
1 month2.2%
6.5%
3 months
24.5%
21.9%
6 months
2.2%
15.1%
12 months
12.4%
17.6%

(Note) From the fourth week of August 2016 to the fifth week of July 2020＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
The 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 of or
reliance on this report. Investors who read this report must make their own decisions on all investment mattersand 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, the stock of thecompany 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 most recent (updated) version of this report, please see our website （http://www.awincap.com/）.
We do not warrant or represent that the information in this report 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 the inquiries. SV20208062100
Short Report

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