Alpha-Win Company Research Report
PCA(9629 TSE First Section)● SummaryIssued: 6/25/2019

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

Business Description
・ PCA CORPORATION (hereinafter the “Company”) is an independent software manufacturer specialized inpackaged enterprise system software. It is a major specialized player in the industry.
・The Company was founded in 1980. Since then, it has been providing on-premises or cloud-based software mainly
to small- and medium-sized companies. The Company’s mission is to contribute to society as a “managementsupporting company” that supports the smooth management and operation of other companies mainly by providing
enterprise system software that realizes high-level automatization.
Current Financial Performance
・The Company's financial performance is extremely strong, having achieved significant sales and profit growth forthe fourth consecutive fiscal year. In FY 2019 (last fiscal year), sales were Y11,439 million (+16.9% YoY) andoperating profit was Y1,248 million (+54.7% YoY). Although sales were slightly below the upwardly revised target
announced in February of this year, each of the profits exceeded their targets. Thanks to continued growth of sales
related to the cloud and the labor management system, which are the Company’s growth drivers, in addition to theevent-driven high demand (early demand from the rise in the consumption tax rate, termination of Windows 7 support,etc.), sales of the solutions and the products grew and contributed to the total sales growth. As a result, record-highsales were achieved for the first time in five years. In addition, the increase in costs such as new product development
and personnel expenses was offset by the effect of increased sales and the improvement in gross margin and SG&A
expenses ratio, resulting in a significant rise in profit.
・In FY 2020 (this fiscal year), the Company plans to increase sales by 11.8% YoY (Y12,783 million: another recordhigh) and operating profit by 18.5% (Y1,478 million: the fourth highest in the Company’s history) and achieve a
record-high net profit of Y976 million. In addition to the continued growth of the cloud and the labor management
system, the continued event-driven high demand is expected to raise sales and profits for the fifth consecutive fiscal
year.
Competitiveness・The Company has a customer base of approximately 240,000 companies and is marked by its high brand recognition
and top-ranking market share in the fields of accounting and finance for small/medium-sized companies. The
Company’s cloud-based enterprise system software business in those fields is especially strong, continuing to rank
No. 1 in the industry as a pioneer of the business. Going forward, we should pay attention to how the Company fares
in the competition with its major competitors that have entered the cloud service business at a later stage.
・The Company’s strengths are its ability to concentrate management resources in its field of expertise as a specialist
to develop products and services that meet various customer needs including those related to changes in tax and otherregulations, its stable customer base, and its ability to provide high-quality products and services at reasonable prices.
Business Strategy
・As the basic business strategy for its corporate group, the Company aims to create a strong earnings base for its main
businesses (reinforce and increase the sales of PCA Cloud and strengthen the on-premises business), create new
business opportunities, and strengthen the management system to become a highly profitable company. In addition,
the Company has started a new strategy – the reinforcement of product creation – through which it hopes to enter
another growth phase by providing new products and services.
・No change has been made to the medium-term business plan disclosed last year, in which the consolidated numericaltargets for the final fiscal year, or FY 2022, have been set out as follows: Y11.5 billion or greater for sales (of which
the sales of the subscription-based businesses are targeted to be Y6 billion), Y1.5 billion or greater for operating
profit, and 10% or greater for operating margin.

1/41
This Alpha-Win Company Research Report (hereinafter “this "Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or fit
for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use ofor reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of thisReport belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

Forecast on Financial Results
・ Upon evaluating the effects of the event-driven high demand, sales of the cloud and other businesses, and theestimated cost, Alpha-Win Research Department has judged that the Company’s plan for this fiscal year isconservative with regards to both sales and profits and that there is room for upward revisions. Next fiscal year, a
temporary decline in sales and profits due to a fallback from the event-driven high demand seems inevitable. However,since the Company is in a phase where its subscription-based businesses are continuously expanding, if the new
businesses currently in progress begin to be successful, we expect that the Company will be able to enter anothergrowth phase over the medium to long term and achieve continuous increases in sales and profits.
Stock Price・A defensive, domestic-demand-related, small-cap growth stock that is positively affected by the rise in consumption
tax and the work-style reform. The stock price soared in response to the recovery in financial performance, achievingin May the highest price since becoming listed on the market and outperforming the TOPIX significantly. The stock
price has been steady since then. Comparing valuation indicators with the average of the First Section of the TSE,
the Company’s P/E, dividend yield, and P/B are slightly on the high side. However, compared to its two major
competitors, it still has an undervalued impression regarding many valuation indicators. Over the past two years, theCompany's stock has been significantly outperforming its two competitors.
Shareholder Return
・The Company has continued to make stable payment of dividend (a dividend payout ratio of about 30%) and hasbought back its shares. This fiscal year, it plans to keep the dividend of Y31 per share per year. When the Quo Card
shareholder benefit plan is taken into account, the actual dividend yield comes out to be 1.5% (at maximum). As its
KPI, the Company has set the DOE target to 2.5%. Consequently, over the medium to long term, with expected strong
financial performance, the Company may increase shareholder return through means such as dividend hikes, aflexible buyback of shares, stock splits, and enhancement of the shareholder benefit plan.

(Note) CE = the Company’s estimate/forecast. E = estimate/forecast by Alpha-Win Research Dept. All fiscal years discussed
in this document are March-ending. Hereinafter, differences that arose during the calculation processes, etc., may cause values
for the same item to not match completely.

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

2/41This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or fit
for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use ofor reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of thisReport belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019(Note) Reflects stock price andindex values up through6/14/2019. Prepared by AlphaWin Research Dept.

3/41This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or fit
for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use ofor reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual property of thisReport belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

Contents
1．Company Overview ........................................................................................................................ P5
Major Specialized Player in the Enterprise System Software Industry ............................................. P5
Business Philosophy .......................................................................................................................... P7
2．Business Description and Business Model ................................................................................... P8
Enterprise System Software Necessary for Efficient Business Operations ....................................... P8
Business Model with High Continuity and Marginal Profit Ratio .................................................... P8
Expansion of Highly Stable and Profitable Subscription-Based Businesses ..................................... P9
Cloud Business as the Growth Driver .............................................................................................. P10
3．Shareholder Composition ............................................................................................................ P12
Change in Composition by Type of Shareholder ............................................................................. P12
Major Shareholder Composition ...................................................................................................... P12
4．ESG .................................................................................................................................................. P14
Environment, Society, and Governance............................................................................................. P14
5．History of Growth ........................................................................................................................ P15
Company History ............................................................................................................................. P15
Past Transition in Financial Results ................................................................................................. P15
6．Business Environment ................................................................................................................. P18
Market Trend for Enterprise System Software ................................................................................ P18
Comparison with Competitors ......................................................................................................... P19
7．Last Fiscal Year’s Results and This Fiscal Year’s Forecast .................................................... P22
Financial Results for FY 2019 (last fiscal year) .............................................................................. P22
PCA’s Financial Results Forecast for FY 2020 (this fiscal year) .................................................... P25
Alpha-Win Research Dept.’s Financial Results Forecast for FY 2020 (this fiscal year) ................ P27
8．Growth Strategy ........................................................................................................................... P29
Management Indicator Targets and Areas of Focus ........................................................................ P29
New Medium-to-Long-Term Vision
PCA Vision 2030: 1st Stage – Medium-Term Business Plan to 2021 ..................................... P29
Alpha-Win Research Dept.’s Financial Results Forecast for the Medium Term ............................ P32
9．Analyst’s View .............................................................................................................................. P34
PCA’s Strengths and Challenges ..................................................................................................... P34
Shareholder Return and Shareholder Benefit Program .................................................................... P35
Stock Price and Factors that May Affect Stock Price ........................................................................ P36
10．(The 2nd ) Interview with the President ...................................................................................... P39
Q&A ................................................................................................................................................... P39

Note: Upon translating to English, when the page numbers differed from the original Japanese version, they were
adjusted to those of the English version of the Report.
4/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

1. Company Overview
 Major specialized player in
the industry with 39 years
of practice, developing
and providing packaged
enterprise system
software forsmall/medium-sizedcompanies(1) Enterprise system: a part ofa company’s information
system that deals with matters
directly affecting business, suchas financial accounting,production control, sales andinventory control, purchases,
HR, and payroll. A generalterm for back-officeapplications. Also called themission-critical system, it serves
as an important core system for
operations/services.
 The Group is comprised of

the Company and 3
subsidiaries.

 Acquired Keepdata, acompany withtechnological development
capability, know-how, andproven record, as afoothold for the datautilization business All fiscal years in thisdocument are Marchending unless otherwise
noted (e.g. FY 2019 ends in
March 2019).
 Meanwhile, the Company
sold its medical system
subsidiary and restructured
its business portfolio.

◆ Major Specialized Player in the Enterprise System
Software Industry
PCA CORPORATION (hereinafter the “Company”) is an independent, midtier, specialized company in the software industry. The Company is a
specialist in developing and selling packaged software (software prepared foruse in certain operations) for enterprise systems1, such as those for accounting
and tax. It is a major player as a specialist of such software for small/mediumsized companies. About 240,000 companies are active users of theCompany’s products, with sales for ordinary companies comprising greaterthan 90% of total sales. With regards to the size of the customer companies,
the Company is especially good at business toward small/medium-sizedcompanies with 50 to 100 employees. 80% of the Company’s sales are via
dealers (the remaining 20% are direct sales). It has the largest transaction withthe dealer RICOH (sells the Company’s software along with its own hardware
such as office appliances), which contributes to about 22% of the Company’s
total sales. The Company’s customers are diversified, with major companies
as its largest customers by monetary value. The Company ranks No. 1 in theindustry in software for public benefit corporations, with software
implemented in in over 8,000 corporations.
As of the end of May 2019, the Company’s group is composed of a total offour companies: the Company and three consolidated subsidiaries. The
consolidated subsidiaries are Xronos Inc. (development/sales of labor
management system and time recorders; the Company founded thissubsidiary in 2001 and owns 80% of the shares), KEC Corporation(implementation support, operation, maintenance, and other services for
PCA’s products/services; wholly owned by the Company, which founded it
in 1998), and the newly acquired Keepdata Ltd. (hereinafter “Keepdata”).
The Company acquired Keepdata in March 2019 and made it a subsidiary(acquired 66.8% of its shares for approximately Y44 million) that will beconsolidated starting this fiscal year (FY 2020). Keepdata’s strength is its
proprietary system (KeepData Hub: cloud service targeting large companies)that enables real-time integration of various big data such as IoT and the onestop management of the accumulation/aggregation/visualization of data tofacilitate effective data utilization. As a management-supporting company,
the Company intends to use this system as a foothold for a new service thatprovides a platform for data utilization to small and medium-sized companies.
In addition, in the future, the Company plans to integrate this system with its
own operation-related product development to create synergy in technology
and business development.
Keepdata posted sales of Y120 million, a net loss of Y262 million, andnegative net assets of Y66 million in FY 2018 (ended September); upfront
investment costs associated with system development had caused a net loss
and an excess of debt. Since the development of the system has been
completed, profit and loss for this fiscal year are expected to be close to zero.
In February 2019, the Company sold MACS System Corporation(development/sales of computer software for medical office use such as
electronic medical records; the Company acquired it as a subsidiary in 2008
and owned 80% of its shares), which was a consolidated subsidiary up
through last fiscal year (FY 2019), since its business was unprofitable
5/41

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

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

Issued: 6/25/2019(following this transaction, Y81 million was posted as loss on sales of stocks
of subsidiaries and affiliates under extraordinary loss).

 Consolidated to parent
company sales ratio has
stayed around 1.1. The
summed recurring profitof the consolidated
subsidiaries has also
been a surplus.

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

[Figure 1] Ratio of Consolidated to Parent Company Sales (ratios shown on upper portion of graph)[Figure 2] Ratio of Consolidated to Parent Company Recurring Profit (ratios shown on upper portion of graph)【 図表 2 】経常利益連単倍率（グラフ上部の数字が連単倍率、単位：倍）(Ref) Figures 1 and 2 were both prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecasts(E) are from the Company’s business plan.

6/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
 Founded by certified
public accountants in
1980
 Rich in cash and debtlessIssued: 6/25/2019
The name of the Company comes from the five founders who were certified
public accountants (CPA); the letters CPA were shuffled into the meaningful
name P (Professional) C (Computer) A (Automation).
The Company’s finance is firm, rich in cash and debt-less. Relative to its salesof Y11.4 billion, total assets of Y20.1 billion, and market capitalization of
approximately Y27.8 billion, its cash and deposits are abundant at Y7.3
billion. Free cash flow (FCF) has been positive except for a certain period,and cash has been increasing (Figure 3). The financial ratios, including theequity ratio of 59% and current ratio of 223%, indicate financial soundness.
(Value as of the end of May 2019 for market capitalization – the rest arevalues as of the end of March 2019).

[Figure 3] Transition in Cash Flow (unit: Y million)(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary.
(Note) Cash and deposits shown are values from the balance sheet, not values used in the CF calculation.

◆ Business Philosophy

 The Group’s basic
business policy is to “aimfor a more rational
business with clear
vision.” The mission statement isto “contribute to society
by developing andproviding packaged
enterprise system
software that realizes
advanced automation.”

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

7/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

2. Business Description and Business Model Enterprise systems are
mission-critical. Stability
and reliability are
critical elements since
they are used inside acompany.

◆ Enterprise System Software Necessary for Efficient
Business Operations
The Company’s main business is enterprise systems that support internalbusiness operations. Unlike systems that simply work on personal computers,
an enterprise system is a computer system that supports a series of processes
throughout all business operation flows in a company. Since it is missioncritical for business operations, it is required to be reliable, efficient, stable,user-friendly, safe, and expandable.
The main ways for building an enterprise system are by package-based
system development and by original system development. Generally, themethod of combining sold packaged software into a system has advantages
such as short development time, cheapness, and having relatively few bugs.
On the other hand, its disadvantage is the difficulty in customizing the system
to a company’s business conditions, operations, management styles, andother specific needs.
For original software development and installment, outsourced development
and in-house development are the two options. In either case, the advantage
of an original system is that it can be made to be user-friendly since it can becustomized to a company’s needs and operations. However, development
cost and time are larger and longer, and it requires revisions, addition offunctions, and maintenance after implementation. Especially for micro-sized,
small-sized, medium-sized, and mid-tier companies, the development,
implementation, and operation of original software are not easy due tofinancial, staff, and time constraints.

(2) Accounting software:
application software forrecording, processing, andintegrated management ofaccounting data
(3) HR and payroll software:
software for payroll
calculations and HR
management

 Provides about 16 typesof originally developed
packaged enterprisesystem software About 70% of sales
come from original
products and services

In response to these needs, the Company has been developing original
enterprise system software that especially meets the needs of individuals or
micro-sized (SOHO), small-sized, medium-sized, and mid-tier companies inareas such as accounting2, finance, HR and payroll3, sales management,purchasing and inventory management, tax, and medical and medical officework. The enterprise system software is either packaged (on-premises:
conventional products operated in-house by a corporate customer) or cloudbased (a service where the corporate customer can operate the enterprisesystem software via the Internet easily and at a low cost without having toprepare its own server). The enterprise system software is sold and distributedby direct or indirect methods.
Additionally, the Company has not only been developing and sellingenterprise system software but has also been expanding its business byproviding consulting services based on solution proposals. With its
subsidiaries, the Company has also been providing various support services
such as maintenance service and implementation/operation support. Goingforward, the Company plans to further strengthen these businesses.

◆Business Model with High Continuity and Marginal Profit
Ratio
The Company provides 16 types of software and its business model is basedon the mass production of several types of products. Due to the nature of its
business, its marginal profit ratio is high. Its original products and services(products/maintenance/cloud) account for greater than 70% of total sales,
while the remaining 30% are from other companies’ products (purchased
8/41This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019
goods) included in the goods/other categories (Figure 4 on page 9).
From the development to the release of a new product, approximately two
years and a corresponding amount of cost are necessary per product. Version
upgrades (revision updates), which are prepared as needed, are released
usually in a one- to two-year cycle. In recent years, software functions havebecome so enhanced that the customers seem to be purchasing less in
response to this version upgrade cycle.
Since these types of software are related to operations that require highreliability, and since software replacements give rise to issues of cost, labor,
and data continuity, their users show little interest in actively or frequently
replacing their current software with an alternative of a different company.
Therefore, customer loyalty is high, and contracts have high repeat rates (50%
to 90% or greater depending on the type of software). The barrier to market
entry is high because trust and brand recognition are a must in this industry
and its companies are currently mostly being able to exist alongside one
another by taking strong positions in different niches.

 Changed its businessmodel – now focused on
the subscription-based
business.

◆ Expansion of Highly Stable and Profitable SubscriptionBased Businesses
Until FY 2016, sales and profit and loss were disclosed for the four businesssegments of “for ordinary companies,” “for non-profit organizations,”“medical,” and “cloud.” In FY 2017, all business segments became
consolidated. Sales are now disclosed for fives sales categories (types):“products,” “goods,” “maintenance service,” “cloud service,” and “otheroperating revenue” (also called “solutions”) (Figure 4). Profit and loss bysegment are no longer disclosed.

[Figure 4] Sales Classification (by category)(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and interviews. Includes estimated values.

 Subscription-based
maintenance and cloudbusinesses (“stockbusinesses”) accountfor about 50% of thetotal sales.

During FY 2019, the maintenance service contributed the most to total sales(Figure 4 and Figure 5 on page 10), serving as a stable source of profit. In
recent years, sales of the cloud service for packaged software have largely
grown. In fact, the cloud service is becoming a growth driver for the entire
company with regards to both sales and profits. Subscription-based revenue,
which is the sum of the maintenance service and the cloud service, accounts
for about 50% of the total sales, contributing to greater stability inmanagement and profit. Both the maintenance service and the cloud service
have a high gross margin and continuity.
On a consolidated basis, sales breakdown by software operation type is notdisclosed. However, sales seem to be diversified, with sales for “accounting
software” predicted to be the largest by composition (about 15% of the total
9/41

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

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

Issued: 6/25/2019
sales), followed by “sales management and purchase & inventory
management,” and then by “payroll and HR” (“other including the cloud”
comprises greater than 50% of the total sales).

 Shifting from salesbased to profit-based
internal management offinancial performanceand goals

Currently, as the Company’s primary internal management targets, goals areset for software sales (or the sold number of products) by operation type.
Profit and loss by software operation type are not targets of management.
However, going forward, the Company plans to develop and establish aperformance management indicator for each internal organizational unit, etc.,
and make a transition from sales-based management to profit-based
management. The Company has commented that the profit/loss values foreach software operation type do not greatly differ between one another, but
the main accounting software business is assumed to be generally highly
profitable. Meanwhile, since the profitability of the business for medical
software and related products, which was started at a later stage, hadworsened due to upfront investment costs such as sales promotion anddevelopment expenses, the Company sold the subsidiary concerned with thebusiness and withdrew from the business (past disclosures indicate posting ofa loss for this business segment).
The percentage of new software sales or version upgrade sales over total sales
changes every year, but the percentage of version upgrades has always been
greater than 50%. As a side note, the Company’s on-premises tend to beinstalled and used by users on a single PC (stand-alone).
[Figure 5] Change in Sales and Sales Breakdown (unit: Y mil, %) Rapidly shifting frompackaged to cloudbased software Sharp growth of thecloud: awakening of
PCA, “the sleeping
beast”(Ref) Excerpt from the Company’s financial results briefing supplemental materials,
reworked by Alpha-Win Research Dept.

◆ Cloud Business as the Growth Driver
Until recently, the Company had focused its business on conventional
packaged software, also known as the on-premises. However, as the Internet
became more sophisticated and more widely used, the Company predictedthat demand for the cloud will rise due to its user-friendliness and cost
performance. Therefore, since 2008, the Company has been providing cloudversions of the same software as the on-premises, more than ten years aheadof its competitors. This cloud business, where customers pay fees
10/41

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

Alpha-Win Company Research Report
PCA (9629 TSE First Section) The rapidly growing

cloud is based on a
subscription-based,stable business model.
Taking a lead in theindustry, the Company
has a competitive
advantage.

(4) API (Application
Programming Interface):interface/network to operate
software; connects thesoftware and the program.
(5) Kintone: cloud service
for building business app ona web database, provided by
Cybozu. Allows easy systembuild-up and linkage withother systems.

Issued: 6/25/2019
continuously for a certain period of time to use the software, is attractive as astable, subscription-based business model, similar to the maintenance service.
As shown in Figure 6, the Company has lately been focusing its business on
the cloud service, and the number of contracts as well as sales has been
growing steadily. As the cost of this cloud business is largely fixed, withsmall variable costs such as those related to manufacturing, sales, andlogistics, this business has a high marginal profit ratio.
The Company leads the industry as No. 1 in cloud-based enterprise system
software for small/medium-sized companies. The advantages listed below
seem to be making the Company stand out from its competitors. Itscompetitors have also begun their full-scale entry into the cloud market inrecent years (2017-2018) as their “first year of the cloud,” but the Company
is expected maintain its advantages for the meantime.
・ Providing a wide variety of advanced software for business operations
・ Originally-developed open architecture and low cost・ Economies of scale are in effect, with more than 12,000 companies alreadyusing the cloud as customers, contributing to the Company’s profit
・ Consequently, it has a strong price advantage compared to its competitors
・ Ten years’ worth of operation know-how
・ User-friendly, with WebAPI4 allowing linkage with other companies’
cloud (already linked with about 60 companies, including Kintone5 ofCybozu)[Figure 6] Transition in the Number of Companies that Have Implemented PCA Cloudand Sales of PCA Cloud 製品開発は、あたり約年の期間と億円の開発費を要する。
(Ref) Prepared by Alpha-Win Research Dept. using information including those from the Company’s financial
results briefing materials and interviews. (E) represents estimates/forecasts made by Alpha-Win Research Dept.

11/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

3． Shareholder Composition◆ Change in Composition by Type of Shareholder
 Shares were transferred

due to inheritance andother events, but there
was no substantialchange in major
shareholder
composition.

Regarding shareholder composition by shareholder type as of the end of
March 2019 (Figure 7), the sum of “other corporate entities” and “individuals,etc.” accounts for approximately 80% of all shares. “Overseas corporate
entities, etc.” and “financial institutions, etc.” account for only 11% and 7%,
respectively, although the share of “financial institutions, etc.” is graduallyrising. Certain individually owned shares were transferred upon inheritancefrom the founder (Mr. Kawashima) and then transferred in FY 2017 to a
general incorporated association (the founder family’s asset managementcompany, categorized under “other corporate entities”). However, no
substantial change has occurred in the composition of major shareholders.

[Figure 7] Change in Shareholder Composition by Type of Shareholder (unit: %)(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and general shareholders’ meeting reference materials.

 GOLDMAN SACHSINTERNATIONAL newly
appeared as the second
largest shareholder with
4.6%
。 of all shares.
 The founder family’s
asset managementcompany is the largest
shareholder with greaterthan 40% of all share.
This, combined with thetreasury shares and theemployee stock
ownership plan,amounts to more than
50% of all shares,
indicating stability.

◆

Major Shareholder Composition

Major shareholders as of the end of March 2019 are shown on Figure 8 on
page 13. One key difference compared to the end of March 2018 is that, as
the second largest shareholder (ranking excludes treasury shares; the same
applies hereinafter), GOLDMAN SACHS INTERNATIONAL (ownsapproximately 4.6% of all shares) appeared in the major shareholder ranking
for the first time (while its investment purpose is unknown, it has invested inseveral Japanese stocks under the same name; presumed to be pureinvestment from a fund). Although there have been some fluctuations in theshareholding ratio, the major shareholders have not changed significantly.
Below is supplemental information.
・The largest shareholder Kawashima Co., Ltd. is the asset managementcompany of two directors of the Company (president Sato and Mr.
Kumamoto) and their relatives (descendants to the founder Mr. Kawashima).
After Kawashima Co., Ltd. indicated its intention to sell its shares, theCompany acquired 200,000 shares (equivalent to 2.6% of outstanding shares)
by a tender offer by December 2018. As a result, the Company now owns a
total of approximately 13.6% of its own shares. Essentially, the Company has
been keeping its position as the second largest shareholder. Currently, theCompany has not yet decided on how to effectively use its treasury shares,
12/41

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

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

Issued: 6/25/2019
but some possibilities include cancellation of stock and stock-swap in a tieup or an M&A.

 OBC, its rival, is also amajor shareholder.

 Currently, there is noactivist-like behavior.
Anti-takeover measures
have not been adopted.

・The third largest shareholder Obic Business Consultants Co., Ltd. (OBC)
is a competitor with no transaction with the Company. Mr. Shigefumi Wada,
the eighth largest shareholder, is the current president of OBC. In either case,their purposes are unknown. While there has been no change in the numberof shares held under the corporate account, shares held under the personalaccount are declining.
・The fourth largest shareholder, State Street Bank and Trust Company
505001, is thought to be a long-term fund investor since it has been
continuing to hold its shares. However, in the most recent year, the numberof shares held decreased by about 90,000. It also invests widely in othersmall- and medium-cap Japanese stocks under the same name, but theshareholding ratio for each company is less than 5%.
・The sixth largest shareholder Mizuho Bank, Ltd. is holding shares probably
for the purpose of cross-shareholding.
・The seventh largest shareholder Logic Systems Co., Ltd.’s purpose isunknown.
・The ninth largest shareholder Nagoya PCA Co., Ltd. is the company towhich software development (SHOKON and other products of the Company)
is outsourced.
・The tenth largest shareholder, KBL EPB S.A. 107704, is a European privatebanking account and is presumed to be an investment fund. This shareholder
also invests in several small- and medium-cap Japanese stocks as a major
shareholder.
・Currently, there are no major shareholders showing activist-like behavior.
Also, the Company has not adopted any anti-takeover measures.

[Figure 8] Major Shareholders’ Status

Unit for shares owned: thou. shares
For ratios: %(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and the generalshareholders’ meeting reference materials.
(Note) The official English name could not be verified for some.

。
13/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

4． ESG◆ Environment
Although the Company does not directly own any production facility andtherefore does not harm the environment, it still makes consideration forenergy/electricity conservation. Specifically, it follows the “cool biz”
standard by setting the default temperature for air conditioners insidebuildings to 28°C.

 Proactively supporting

the disabled and thediscovery and trainingof IT talents◆ Society
In its mission statement, the Company has declared to “support its customers’
business management through packaged enterprise system software.” The
idea is that by contributing to improved user convenience and efficiency, it isfulfilling its responsibility as a member of the society. In addition, theCompany has become a gold sponsor of the U22 Programing Contest backed
by the Ministry of Economy, Trade, and Industry. In becoming a sponsor, it
is supporting the stimulation of Japan’s technologies and innovations and thediscovery and training of talented programmers who will shape the future. In
addition, the Company sponsors and supports athletics promotion activities
such as the marathon.
Also, in order to support the reconstruction after the Great East Japan
Earthquake and help the people who suffered from it, the Company donatedto the incorporated non-profit organization Médecins Sans Frontières (MSF)
Japan. Furthermore, it provided free replacements for the Company’s
products (CD-ROM, manuals, etc.) that were damaged or lost due to the
Earthquake.
The Company also operates a farm in Chiba Prefecture where it proactively
hires physically disabled staff. It also purchases flowers, lunchboxes,
bakeries, etc., produced by a company that hires physically disabled staff.

 Promoting diversity by
improving gender mix.
Has set goals toincrease the percentageof women.

As a general employer action plan based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace, the Company
has set goals to “continue to hire new female employees at a ratio of 40% or
greater for new hires, raise the percentage of female full-time employees fromthe current 25% to 30%, and create a foundation for raising the number of
future female managers by raising the percentage of women in our company.”
The Company is promoting the workplace retention of women and making
efforts to promote greater female participation. One outside director and one
outside auditor are women.
◆ Governance
For internal control, the Company has set up an internal audit office, directly
under control of the president, that operates in cooperation with two outside
directors. It has also set up a risk-control committee with the president as thechairperson to create a risk control system that can flexibly, quickly, andappropriately respond to the risks.
As of June 2019, the Company does not have an executive officer system.
The management team is comprised of six directors (including two outside
directors) and four auditors (including three outside auditors, one tax
accountant, one CPA, and one lawyer).

14/41This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

5． History of Growth◆ Company History
 Founded in recognition

A group of five certified public accountants with the late Mr. Kawashima as
its leader founded the Company in 1980 in recognition of the importance andthe promising future of computer and software businesses in Japan. At first,
they developed and sold business accounting software for small businesscomputers. In 1995, in anticipation of making transition from small businesscomputer users in the future, the Company officially began the development
and marketing of packaged software for personal computers (PC).

 With a pioneering spirit,
became the first to begin
cloud services in theindustry

Then, with the emergence of the PC era, the Company grew mainly due tothe following four efforts: 1) created a greater variety of and version upgradesfor packaged software in Japan, 2) expanded the maintenance service
business, 3) developed the cloud business, and 4) expanded the solutions
business which includes providing other companies’ products. Furthermore,by increasing the number of offices and cooperating with manufacturers anddealers, the Company developed a nationwide sales/support system that
helped rapidly expand its business. The Company is also seen as a pioneer inthe rather conservative industry, as it was the first in the industry to begin
providing cloud services (SaaS6) in 2008.

of the importance andpromising future ofcomputer and enterprisesystem software
businesses in Japan(6) SaaS (Software as aService): software where, as aservice, one can use thenecessary function in thenecessary amount whenneeded; or the method ofproviding such service.
Instead of the user installingthe software, the vendor
operates the software andprovides the necessaryfunction to the user via a
network.

 Changed its market
listing from the Second
to the First Section of
the TSE in Dec. 2014
 Has been generally
increasing sales over thelong term. Meanwhile,
profit had not changed
significantly.
 Achieved record-highsales of Y10 billion in2014 thanks to eventdriven high demand

Regarding shares, the first public offering was made in 1994. The Company
was then listed on the Second Section of the TSE in 2000 and then the First
Section in 2014. Upon becoming listed on the First Section of the TSE, theCompany changed its logo to the current one.

◆ Past Transition in Financial Results
Since foundation until now, the Company has been expanding its business asa specialist in the development and marketing of enterprise system softwareand related businesses, as described above. The transition in financial results
since its first public offering is described in Figure 9 on page 16. The
following is supplemental information on the financial results, inchronological order:
・Aside from certain periods such as the post-Lehman economic downturnand the fallback from the high demand stimulated by revisions in tax andregulations, etc., the Company has generally kept increasing sales since 1994.
On the other hand, no significant improvement had been made for profit,
being unable to maintain or raise the level of profit that it had once achieved.
・ Consecutive decreases in sales and profit from FY 2001 to FY 2002
occurred due an economic downturn and the fallback from the high demandbrought by the year 2000 problem.
・The four consecutive decreases in sales from FY 2007 to FY 2010, as wellas the seven consecutive decreases in profit from FY 2007 to FY 2013, werecaused by decreased demand (due to the post-Lehman economic downturn,etc.) and increased personnel, R&D, and sales promotion expenses, as well
as worsened profitability caused by intensified competition.
・In FY 2014, record-high sales (Y10,475 million) were achieved thanks to
the high demand driven by two events: the termination of Windows XP
support (support ended in April 2014) and the change in consumption tax(from 5% to 8% in April 2014). The large growth of the cloud service also
contributed to the record-high sales.
15/41This 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.

 長期的に は増収トレン
ド。一方、利益は足踏み状態が続いた。

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

Issued: 6/25/2019
・Decreased sales in FY 2015 are explained by the fallback from the highdemand driven by the two events as described above. Since FY 2016, theCompany has been increasing its sales again thanks to the continued growthof the cloud, new products, strengthened sales force, and economic recovery.
[Figure 9] Long-Term Transition in Financial Results(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. Estimate/forecast (E) for FY
2020 is from the Company’s business plan.

(7) ERP (integrated
operation): stands forEnterprise Resource
Planning. Management
concept based on the
integration and real-timeprocessing of core businessinformation to efficiently
optimize as a whole.
Provided as IT solutions
software for integrating
enterprise systems.
 Record-high operating
profit and recurring
profit in FY 2006

With regards to earnings, a record-high net profit (Y937 million) was
achieved in FY 2000, having benefitted from the high demand brought by theyear 2000 problem. Additionally, in FY 2006, record highs were achieved for
operating profit and recurring profit (Y1,747 million and Y1,783 million,
respectively). Demand stimulated by the revised accounting regulation for
public benefit corporations and by the drastic changes in regulation causedby the new Companies Act, as well as the Company’s ERP 7 (integrated
enterprise system) product Dream 21 (old product name), contributed to
improved profitability leading to these record highs in 2006.
For many years, the Company’s gross margin and operating margin had been
gradually decreasing (Figure 10). Gross margin declined due to increased
price competition from intensified competition among packaged softwaredevelopers during the economic downturn, worsened product mix from a risein the percentage of other companies’ less-profitable goods, and higher costs
especially for labor costs, production expenses (subcontractor costs), andR&D costs.

[Figure 10] Long-Term Transition in
Gross Margin and Operating Margin(Ref) Prepared by Alpha-Win
Research Dept. based on the
securities report. The Company’s
estimate/forecast (E) used for FY
2020.

16/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
 A net loss was posted for two
consecutive years in a
fallback from past eventdriven high demand.
 From FY 2016, began toconsecutively raisesales/profit, staying in theblack, thanks to new
products, growth of thecloud, and cost reduction.
Operating margin improved.
 The Company is also
beginning to see the effectsof structural reform andfinancial performance isrecovering in a V-shaped
curve.
 Past revisions to financial
results have often been
made in Sept. or Feb.-Apr. of
the following year. In themost recent three fiscal
years, the initial profit targets
have been exceeded.

Issued: 6/25/2019
Despite efforts to cut down on cost, a net loss was consecutively posted in
FY 2015 and FY 2016 (net loss for the year: -Y207 million in FY 2015 and Y93 million in FY 2016), affected by decreased sales due to the fallback fromthe event-driven high demand as described above and the postponed revisionof consumption tax to 10%.
However, since FY 2016, the Company has been increasing sales again andthe decline in gross margin had stopped. Operating margin bottomed out andbegan to gradually increase thanks to increased sales for the new products
and the cloud and cost reduction. In recent years, the Company has beenworking on a structural reform including the disposal of assets with
impairment risk (real estate and securities) and shortening of softwareamortization, and is starting to see positive results from these efforts. Whiledomestic sales have been dwindling just below Y10 billion, cost reduction
and sales growth of the cloud and maintenance services have helped with theCompany’s recent success in the growth and recovery of its financial
performance. Since FY 2017, the Company has been continuously making
and increasing profit. In FY 2019, the Company achieved an increase in sales
and a significant increase in profit for the fourth consecutive year.
As a reference, Figure 11 shows the comparison of the Company's initial
forecast and its actual results in the past in chronological order. Although
the actual results have sometimes greatly deviated from the initial forecast,since the recovery phase starting in FY 2017, sales have been close to theinitial forecast and profits have generally tended to exceed the initial
forecast. As a side note, past announcements of revisions to financial results
have often been made in September or February to April of the following
year.

[Figure 11] Comparison of the Company’s Initial Financial Results Forecast and Actual Results in Chronological Order(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and securities report. Forecasts/estimates (CE) for
FY 2020 are from the Company’s plan.

17/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
 Decreasing number ofsmall/medium-sizedcompanies (potential
users) in Japan(8) Small-sized company:
diff. definition by eachindustry, but essentially thesame as “small/mediumsized companies” in staff sizeand sales

Issued: 6/25/2019

6． Business Environment◆ Market Trend for Enterprise System Software
The number of companies in Japan is on a downward trend, falling below
four million companies (Figure 12). The number of small/medium-sizedcompanies – the Company’s target customer zone – is especially declining
because of small-sized companies8 closing their businesses. With thedecreasing population and aging society of Japan, the total number of small
and medium-sized companies (the Company’s customers) is decreasing. In
fact, the total number of companies as of June 2016 was approximately 3.59
million, which is about 0.62 million smaller (-14.7%) compared to 2009.

[Figure 12] Change in the Number of Companies in Japan(Ref) Data aggregated by the Small and Medium Enterprise Agency based on the “2016 Economic Census for Business Activity”
by the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry

Meanwhile, facing aggravating necessities for manpower, operational
efficiency, and improved corporate financial performance, companies andother corporate bodies have been working on rebuilding or reinforcing theirenterprise systems. While the number of small/medium-sized companies willcontinue to tend to decrease, we predict that the size of the relevant market
will steadily increase as the demand for software to streamline business
operations increases.
Also, according to the “WHITE PAPER Information and Communications inJapan” by the Ministry of Internal Affairs and Communications, the size ofthe packaged software market (excluding game software, embedded software,etc.) in 2015 was approximately Y1.1 trillion and its size has been gradually
increasing in recent years.
We estimate Japan’s current market size for enterprise system software
specifically related to the Company’s business to be approximately Y500
billion and for ERP to be approximately Y100 billion. Annual growth rate is
forecasted to be about 3% for the former and 10% for the latter over the
medium term. The cloud-based enterprise system software market is expected
18/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

 Stably growing
enterprise system
software market.
Transitioning from theon-premises to thecloud.
 Market potential for

cloud-based enterprisesystem software in
Japan continues to begreat.

Issued: 6/25/2019
to have an especially high annual growth rate of 20-30% over the long term,
replacing a part of the packaged software (on-premises) market. In fact,compared to the U.S. where the use of cloud-based enterprise system software
is several years ahead of Japan, the penetration rate of such system in Japanis ½ to ⅓ of that of the U.S. (ref: “WHITE PAPER Information andCommunications in Japan” by the Ministry of Internal Affairs andCommunications, etc.). With regards to the software development method inJapan and the U.S., outsourced development continues to be popular in Japan.
In fact, the share of packaged software in Japan is about 12%, which is about
a quarter of the share in the U.S. (Figure 13). Consequently, the growthpotential of the packaged software market in Japan also seems to be large(according to the year 2017 version of the “WHITE PAPER,” the penetration
rate of the cloud in Japan is approximately 26% for “payroll / financial
accounting / HR” and only 6-8% each for “production management / logistics
management / store management,” “purchasing,” and “sales on orders”).

[Figure 13] Software Ratio in Japan and the USA(Ref) Ministry of Internal Affairs and Communications: “Report on Current Status of Japan’s ICT”

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

19/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
 Its key product, theaccounting software, isthird in the industry.

 OBC, MJS, Yayoi, and

OHKEN are its rivals.

 In addition to OBC,
competing with Money
Forward and freee withregards to the cloudbusiness

 The Company provides
high-quality products
and services at areasonable price.
 Regarding margins andasset efficiency, althoughleaving room for
improvement, each of
the margins hasbottomed out and begun
to increase due toimproved gross marginand cost reduction.

Issued: 6/25/2019
The Company has different rivals for each type of operation targeted by its
software. In general, regarding business including its key accounting software,
its rivals among listed companies are thought to be Obic Business Consultants(OBC: 4733), directly, and Miroku Jyoho Service (MJS: 9928), indirectly. In
particular, OBC is its greatest competitor, since it has a similar product lineup
and business model as the Company. Among unlisted companies, Yayoi(subsidiary of ORIX), OHKEN (independent company), and OSK(subsidiary of OTSUKA CORPORATION) are its direct competitors.
The accounting software market size is approximately Y200 billion. The
market is reaching maturity and its size should not largely change. In thismarket, the Company is estimated to be third from the top (about 10% of total
market shares). The Company seems to have a similar level of market shareand be at a similar position with its payroll and HR software. Money Forward(TSE Mothers: 3994) and freee (unlisted) also join in as rivals in the cloudmarket.
The Company is characterized by how it provides high-quality but
reasonably-priced products and services to its customers.
A comparison of the long-term transition in gross margin and operating
margin of the three major listed companies (the Company, OBC, and MJS) is
shown in Figures 15 and Figure 16 on page 21. Compared to the Company,
both OBC and MJS’s margins are stable, presumably due to the merit of scale(the sales of both OBC and MJS are about 2.6x greater than the Company’s,
and their operating profits are about 10x and 4x greater, respectively), thedifference in efficiency, and the difference in sales composition. Bothcompanies used to have a lower proportion of users signing a contract for the
maintenance support service, but succeeded in raising this ratio, resulting ina greater earning capacity. However, the Company’s profit margins have alsobottomed out in recent years, and the Company is now aiming for a greater
earning capacity.
Similarly, looking at the transition in the Company’s ROA and ROE in Figure
17 on page 21, while the ratios have been sharply improving in recent years,
the Company seems to have room for improvement in earning capacity as
well as asset efficiency. (Actual results for FY 2019, in the order of ROA and
ROE: compared to 7.8% and 6.8% for PCA, 9.1% and 10.7% for OBC and21.7% and 16.1% for MJS.）[Figure 15] Long-Term Transition in the Gross
Margin of Three Major Listed Companies(PCA, OBC, and MJS)
(Ref) Figures 15-17 were prepared by Alpha-Win
Research Dept. based on the securities report.
Estimates/forecasts (CE) are from the Company’s business
plan.

20/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019[Figure 16] Long-Term Transition in the Operating Margin of Three Major Listed Companies(PCA, OBC, and MJS)

[Figure 17] Transition in the Company’s ROA and ROE

21/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

7．Last Fiscal Year’s Results and This Fiscal
Year’s Forecast

 Last fiscal year, theCompany achieved anincrease in sales for the
fourth consecutive year
and record-high sales.
Margins improved andprofit increased
significantly. Results
exceeded the initial
forecast.

◆ Financial Results for FY 2019 (last fiscal year)
Full-year, consolidated financial results for FY 2019 (hereinafter, “last fiscalyear” or “previous fiscal year”) were as follows: sales of Y11,439 million(+16.9% YoY), operating profit of Y1,248 million (+54.7% YoY), recurring
profit of Y1,277 million (+53.0% YoY), and net profit attributable to ownersof the parent of Y906 million (+105.5% YoY; hereinafter, “net profit”).
Significant increases in sales and profits were achieved.
In terms of the large upward revision made in February 2019 to theCompany’s initial forecast from the beginning of the fiscal year, althoughsales were slightly below the revised target, each of the profits exceeded theirtargets by several tens of millions of yen. Our prediction had also been about
the same as the Company’s revised plan (Figure 18).

[Figure 18] Change in Financial Results during FY 2019 (last fiscal year)
FY 2019

Consolid
ated

Sales

InitialForecast% YoY
ChangeRevised
Forecast

Diff. from
InitialForecast

ActualResult(unit: Y mil, %)Diff. from
InitialForecast

Diff. from
Revised
Forecast% YoY
ChangeAlpha-Win's
Forecast

Diff. (AlphaWin forecast actual result)

10,486

7.2

11,518

1,032

11,439

953

-79

16.9

11,520

-81

825

2.2

1,195

370

1,248

423

53

54.7

1,200

48

10.9

3.0

0.5

382

1,277

435

53

11.2

3.1

0.5

10.6

0.5

282

906

318

36

870

36

7.6

0.4

Operating Profit

7.9(% over sales)

Recurring Profit

842

10.4
1.0

1,224

33.3

870

8.0

(% over sales)

Net Profit

588
5.6

(% over sales)

10.6
7.6

7.9

53.0

10.4

0.5

1,225

52

(Note) Revised forecast = values announced by the Company on 2/18/2019. Alpha-Win's forecast = values revised as of 2/21/2019.

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary Partly due to the eventdriven high demand, thecloud, products, andsolutions business
contributed largely tothe increase in sales.

 The number ofcorporate users of PCA
Cloud is also currently
steadily increasing.

Each sales category’s contribution to the total increase in sales of Y1,654
million (YoY) is as follows, in the order of decreasing contribution: Y598
million (+32.3% YoY) for the cloud service, Y562 million (+28.8% YoY) forthe products, Y444 million (+23.6% YoY) for the solutions, Y32 million(+3.2% YoY) for the goods, and Y16 million (+0.5% YoY) for the
maintenance service (Figure 19 on page 23). Sales increased in all categories,
but sales of the cloud service, products, and solutions especially grew well –by about 20-30% each – thanks to the effect of the event-driven high demand(rise in the consumption tax rate, termination of Windows 7 support, version
upgrades related to the change in the name of the era, etc., led to an early
demand of almost a billion yen, as estimated by the Company). As a result,
the Company achieved a record-high for its full-year sales for the first timein five years since the record of Y10,475 million attained in FY 2014 when ahigh demand was induced by two events.
The number of coompanies using PCA cloud reached 10,000 on January 11,
2018, and then increased to 11,331 by the end of September 2018 and 12,313
by the end of March 2019 – more than 2,300 new users were acquired in about
15 months (Figure 6 shown previously on page 11). On a monthly basis, thesimple average for the net increase in the number of corporate users was about
160 per month. This good trend is continued into this fiscal year. About 40%of the total number of new contracts are with new customers.
As a result, sales of the cloud service increased substantially from Y1,854
million in the fiscal year before the previous to Y2,452 million in the previous
22/41

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

Alpha-Win Company Research Report
PCA (9629 TSE First Section) The labor management
system also contributed
to both sales andprofits.
(9) Labor management
system: also called theattendance management
system, it manages/utilizes
various info on working
hours. Can automaticallyaggregate data on working
hours, etc., and prepare
data to link with payroll
software. Provided as onpremises or by cloud.

Issued: 6/25/2019
fiscal year. The sales growth rate of the business from FY 2017 to FY 2019was 29.9% → 23.9% → 32.3%; the rate has been maintained at a highlevel of 20-30% as the Company began to provide the cloud service in fullscale.
The sales growth rate of the maintenance service has been increasing only
little by little every year, remaining mostly flat. This is because, with the shift
from the on-premises to the cloud, the maintenance service is no longer
needed. In addition, subscription-based sales (the total of the maintenanceservice and the cloud service), which is a key indicator for the Company, havelost its share of total sales by 2.1 points from 50.7% at the end of March 2018
to 48.6%. This decline is explained by the fact that customers who still prefer
to use stand-alones have purchased the on-premises in response to thecampaign before the rise in cosumption tax or in response to the version
upgrades, leading to a siginificant growth in the sales of the products fromquarter to quarter (Figure 5 shown previously on page 10).
Concerning the sales of the products, in addition to the version upgrades
accompanying the event-driven high demand as mentioned above (theCompany alone had increased sales by Y415 million), sales growth was
driven by the labor management system9 of the subsidiary Xronos as it
benefitted from the work-style reform (Y263 million sales increase). This
sales growth helped offset the declined sales of the subsidiary (MACS
System) whose financial performance had worsened.
In addition, sales of implementation support fees, etc., increased (by Y205
million) along with the increased sales of the products, creating a good causeand-effect cycle that resulted in a sales growth of 23.6% for the solutions.
Meanwhile, sales of the goods had remained almost flat (the above
information is shown in Figure 19).

[Figure 19] Actual Sales in FY 2019 (last full fiscal year) (unit: Y mil, %)(Ref) Excerpt from the Company’s FY 2019 financial results briefing materials, reworked by Alpha-Win Research Dept.

23/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

 Last fiscal year, the grossmargin greatly improved.
(10) PCA Hyper: a new software
for mid-tier companies as a
successor to Dream21. Targets theapprox. 90,000 companies in Japan
with sales of 1 to 10 billion yen,less than or equal to 1,000
employees, and less than 10
subsidiaries in the corporate group.
A superior version of the DX
Series. Its unique features are how
the user can flexibly select between
the on-premises and the cloudaccording to their stage of growth,make flexible linkage with othersystems using API, and streamline
data management for the entire
corporate group (consolidated
accounting).

Issued: 6/25/2019
Meanwhile, concerning the profits, gross profit increased by 22.2% YoY,
having risen by Y1,187 million. In addition to the increase in profit caused
by increased sales, the decrease in software amortization expense helped
improve the gross margin by 2.5 points from 54.5% in the fiscal year before
the previous to 57.0% in the previous fiscal year. On the contrary, the SG&A
expenses increased only by Y746 million or 16.5% YoY, improving the
SG&A expenses ratio by 0.2 points from 46.3% to 46.1%.
Consequently, operating profit increased significantly by Y441 million or
54.7% YoY and operating margin also improved by 2.7 points from 8.2% to10.9%. Factors that increased or decreased consolidated operating profit aredescribed in Figure 20. While the cost rose due to increased maintenancecosts from the modification of software in response to the tax system reform(+Y227 million YoY), increased R&D costs set aside to invest in new
software development mainly for the Hyper Series10 (+Y358 million YoY),
and increased personnel expenses (+Y153 million YoY), these were fully
absorbed by the increase in sales.
Regarding extraordinary gains and losses, the Company sold its investment
securities to improve asset efficiency and recorded Y63 million as
extraordinary gain. On the contrary, when the Company sold its subsidiary
MACS System, it recorded Y81 million as loss on sales of stocks ofsubsidiaries and affiliates under extraordinary loss, almost fully offsetting theabove extraordinary gain as a consequence. Net profit doubled to Y906
million, which is Y465 million greater YoY (105.5% increase; in FY 2018,
an impairment loss of Y244 million was recorded).
Also, although the profits for each category have not been disclosed, the sales
increase of the highly profitable cloud and products had probably greatly
contributed to the profit increase.

[Figure 20] Factors that Increased/Decreased Operating Profit in FY 2019 (last full FY)(unit: Y mil)(Ref) FY 2019 financial results briefing materials, reworked by Alpha-Win’s Research Dept.

24/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019◆ PCA’s Financial Results Forecast for FY 2020 (this fiscalyear) This fiscal year, theCompany expects toincrease sales and profit
for the fifth year in a row.
It plans to achieve recordhigh sales and net profit.

With regard to the financial results for FY 2020 (this fiscal year), theCompany expects sales and profit to increase; it is expecting sales of Y12,783
million (+11.8% YoY), an operating profit of Y1,478 million (+18.5% YoY),
a recurring profit of Y1,499 million (+17.4% YoY), and a net profit of Y976
million (+7.7% YoY) (Figure 23 on page 28). It expects to achieve recordhigh sales for the second year in a row, the fourth highest operating profit in
the Company’s history, and a record-high net profit (the previous record-highnet profit was Y937 million in FY 2000).
Thanks to continued event-driven high demand for the products and solutions,in addition to the continued growth of the cloud and the labor management
system, financial performance is expected to be extremely strong with anincrease in sales and profits expected for the fifth consecutive fiscal year.
Concerning the financial results forecast for the first half, the Company has
decided to keep it undisclosed for this fiscal year too since it believes that,
because it may conduct cost control in line with changes in internal andexternal conditions in order to achieve the final profit target, making a
prediction for the first half is difficult.

 Event-driven high demand

will also be the driver ofgrowth during this fiscal
year.

 Expecting further

improvement in margins

The estimates or assumptions used by the Company in making the full-year
forecast for sales are as shown in Figure 21 on page 26. Contribution to thetotal sales increase of Y1,344 million by sales category, in the order ofdecreasing contribution, is as follows: Y535 million (contributing 39.8%) for
the solutions, Y352 million (contributing 26.2%) for the cloud, Y282 million(contributing 21.0%) for the maintenance, Y157 million for the products, andY16 million for the goods. For the solution business, since there are many
carryover projects due to the replacement of software from the event-driven
high demand, revenue from implementation support is expected to rise inassociation. Therefore, the Company expects the business to contributelargely to the increase in sales (+23.0% YoY). Although the cloud service ismaking steady progress, its financial performance is expected to decline bothin terms of the increase in sales (in the order of last fiscal year → this fiscal
year: Y598 million → Y352 million) and the sales growth rate (+32.3% →+14.4% in the same order as above). For maintenance, the Company plans toacquire maintenance service contracts during the event-driven high demand
for the on-premises, which would lead to a large growth rate (+0.5% →+9.0%). The sales of the products are also expected to grow at a similarly low
rate (+28.8% → +6.2%) since it had already grown significantly during theprevious fiscal year’s event-driven high demand. As a whole, the eventdriven high demand during this fiscal year is expected to be about Y1.1 billion(mainly for the products, cloud, and solutions) and is not expected to besignificantly greater than the demand of a little less than Y1 billion during theprevious fiscal year.
Regarding profit, with improved margins as well as increased sales, theCompany expects that gross profit will increase by Y809 million YoY(+12.4%) and operating profit will increase by Y230 million YoY (+18.5%).
Its plan for this fiscal year is to improve the gross margin by about 0.3 point(in the order of last fiscal year → this fiscal year: 57.0% → 57.3%) and
improve the SG&A expenses ratio by about 0.3 point (46.1% → 45.8%) bysuppressing the growth rate of SG&A expenses (in the same order: +18.2%→ +11.0%), so that the operating margin will improve by 0.7 point (10.9%→ 11.7%). As a result, the operating margin is predicted to improve for the
25/41

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

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

Issued: 6/25/2019
fifth consecutive fiscal year.

 Planning for a double-

digit increase in recurring
profit during this fiscal
year with the increase insales and improvement ingross margin

For non-operating profit and loss, a profit of Y21 million is expected (profitof Y29 million in the previous fiscal year). Recurring profit is expected toincrease by 17.4% from the previous fiscal year. At this point, no major
extraordinary loss is expected, and net profit is expected to increase by 7.7%.
Factors that expected to contribute to the projected increase and decrease inconsolidated operating profit for the current fiscal year are as shown in Figure
22 on page 27. The decrease in software amortization (Y292 million
decrease) is expected to lead to an improvement of gross profit. The increasein sales are expected to offset the increase in expenses from the rise in productmaintenance costs (+Y332 million) mainly to cope with the raised
consumption tax, active investments in the fields of growth to prepare for
future growth, and increase in personnel and sales promotion expenses.
As its product strategy for this fiscal year, the Company plans to benefit fromthe high demand induced by tax system reforms, including the revision of
consumption tax to 10% and the introduction of a reduced tax rate system, bylaunching in August 2019 a new product version adapted to those changes.
Also, since the users are expected to replace their PCs when the Windows 7
support ends in January 2020, the Company may release version upgrades(replacements) of its software in advance.
In addition, as a successor to the ERP software Dream21, from which theCompany has decided to withdraw, a new cloud-related product for mid-tiercompanies – the Hyper Series (PCA hyper) – is scheduled to become released
sequentially (released software for accounting and fixed assets in February
2019; will release payroll and HR management software in July of the same
year; and will release two options in February 2020). However, since theCompany will be busy responding to the event-driven high demand during
this fiscal year, their contribution to financial results is expected to occur inthe next fiscal year onward.
Also, amidst the work-style reform, since many SMEs still have not usedlabor management software, there is a large potential demand. Having taken
advantage of this demand, the Company has been receiving orders for onpremise and cloud versions of the labor management software (cloudservice’s name: X’sion) at an excellent pace. Therefore, the Company expects
a double-digit sales growth for this business (we expect that it will be about+20%).

[Figure 21] Factors that Are Expected to Contribute to Sales in FY 2020 (this FY) (company plan) (unit: Y mil)(Ref) Excerpt from the Company’s
FY 2019 financial results briefing
materials, reworked by Alpha-Win
Research Dept.

26/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
Issued: 6/25/2019[Figure 22] Factors that Are Expected to Increase Operating Profit in FY 2020 (this FY) (company plan)(unit: Y mil)(Ref) Excerpt from the Company’s FY 2019 financial results briefing materials, reworked by Alpha-Win Research Dept.

 With event-driven highdemand, significant
increases in sales andprofits are expectedduring this fiscal year.
However, growth isrestricted by humanresources – an issue toovercome.

 We believe that theCompany’s estimatesfor cost and the sales of
the cloud, products, etc.,
are conservative andthat there is room for an
upward revision to theCompany’s forecast for
profits.

 The amount of orders to

be received in thesecond half and onward,
when the high demand
related to consumption
tax would have ended,
is a factor of
uncertainty.

◆ Alpha-Win Research Dept.’s Financial Results Forecast
for FY 2020 (this fiscal year)
We have updated our original forecast and added a new forecast for FY 2022
(the fiscal year after the next) (Figure 23 on page 28). We revised our forecast
for this fiscal year’s sales upward and kept the forecast for profit about thesame. However, we believe that the Company's forecast for profit isconservative and the actual results could be greater.
The revisions that we made to the financial results are as follows: in FY 2020
(in the order of previous forecast presented in the report issued on February
15, 2019 → current forecast), sales of Y12,200 million → Y12,900 million(+12.8% YoY; the Company’s forecast is Y12,783 million; difference fromthe Company’s forecast is +Y117 million), operating profit of Y1,600 million→ unchanged (+28.2% YoY; Company forecast is Y1,478 million; +Y122
million difference), recurring profit of Y1,620 million → unchanged(+26.9% YoY; Company forecast is Y1,499 million; +Y121 million
difference), and net profit of Y1,110 million → Y1,050 million (+15.9%
YoY; Company forecast is Y976 million; +Y74 million difference). Whilethe human resources capacity is somewhat a bottleneck to the implementation
support and maintenance services, the cloud, the labor management software,and the product version upgrades seem to be continuing to increase their
number of contracts at a steady pace and are predicted to become the driversof growth with regards to sales and profits for the Company as a whole.
The high demand related to consumption tax is expected to reach its peak by
August to September of 2019, but the extent of this demand as well as theoutlook for the amount of orders to be received after the peak is somewhat
uncertain. We cannot rule out the possibility that this uncertainty will cause
fluctuations in sales and profits. However, for the following reasons, we
believe that the Company’s plan for this fiscal year is conservative and has
room for an upward revision in terms of profit.
1. We believe that the assumption that the event-driven high demand will
increase by 10% or a little over 100 million yen compared to theprevious fiscal year is on the conservative side.
27/41

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

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

Issued: 6/25/20192.

As for the sales forecast for each category, we believe that it is a
cautiously made forecast since 1) even though there continues to be nosigns of decline in the orders received, the forecast is based on theassumption that the growth rate of the cloud will be halved in the second
half due to the diminishment of the event-driven high demand (for theincrease in sales, Y598 million last fiscal year → Y352 million thisfiscal year; for the sales growth rate, 32.3% → 14.4%) and 2) the
forecast is based on the assumption that the growth rate of the products
will be small since it grew largely during the previous fiscal year (forthe increase in sales, Y561 million last fiscal year → Y157 million thisfiscal year; for the growth rate, 28.7% → 6.2%). On the other hand, thepredicted growth rate for maintenance is +9.0% YoY (increase in sales:
Y16 million last fiscal year → Y282 million this fiscal year), which
seems high and rather optimistic. Nevertheless, we believe that there isroom for an upward revision to sales by around Y100-300 million in
total.

3.

Various costs such as sales promotion expenses seem to be estimated on
the high side, suggesting that there is room for adjustment. In addition,
since the above-mentioned increase in sales will add to profit, we also
believe that there is room for an upward revision to the profits. However,as a fallback from the event-driven high demand seems inevitable in thenext fiscal year (FY 2021), we believe that this fiscal year may give theCompany the opportunity to control the costs and even out the profits.

 Sales estimates for the

cloud and the products
seem conservative.

 The costs also seem tobe estimated on thehigh side; there seems
to be room for an
upward revision to
profit.

[Figure 23] Alpha-Win Res. Dept.’s Financial Results Forecast for This Fiscal Year and New Medium-Term Forecast(unit: Y mil)Unit: Y mll, %
Sales
Goods

FY 2019 AR
11,4392,516
1,020

FY 2020 CE
12,7832,673
1,036

FY 2020 E
12,9002,700
1,020

FY 2021 E
11,0001,800
1,000

FY 2022 E
11,6001,900
1,000

Maintenance Service

3,125

3,407

3,220

3,000

3,000

Cloud Service

2,452

2,804

3,100

3,400

4,000

Other Operating Revenue

2,322

2,857

2,860

1,800

1,900

Gross Margin

57.0%

57.3%

57.4%

57.3%

57.5%

SG&A Expense

5,274

5,852

5,805

5,100

5,300

46.1%

45.8%

45.0%

46.4%

45.7%

1,248

1,478

1,600

1,200

1,400

10.9%

11.6%

12.4%

10.9%

12.1%

1,277

1,499

1,620

1,220

1,420

11.2%

11.7%

12.6%

11.1%

12.2%

906

976

1,050

800

920

7.9%

7.6%

8.1%

7.3%

7.9%

16.9%
28.8%
3.2%

11.7%
6.2%
1.6%

12.8%
7.3%
0.0%

-14.7%-33.3%
-2.0%

5.5%
5.6%
0.0%

Category

Products(% over sales)

Operating Profit(% over sales)

Recurring Profit(% over sales)

Net Profit for the Year(% over sales)

Sales (% YOY growth for all values)
Category

Products
Goods
Maintenance Service

0.5%

9.0%

3.0%

-6.8%

0.0%

Cloud Service

32.3%

14.4%

26.4%

9.7%

17.6%

Other Operating Revenue

5.6%

23.6%

23.0%

23.2%

-37.1%

Gross Margin (% YOY diff.)

2.5%

0.3%

0.4%

-0.1%

0.2%

SG&A Expense (% growth)

16.5%

11.0%

10.1%

-12.1%

3.9%

Operating Profit (% growth)

54.6%

18.4%

-2.4%

-25.0%

16.7%

Recurring Profit (% growth)

53.1%

17.4%

28.2%

-24.7%

16.4%

Net Profit for the Year (% growth)105.4%

7.7%

13.7%

-23.8%

15.0%(Ref) Prepared by Alpha-Win Research Dept. CE = the Company’s estimate/forecast. E = Alpha-Win Research Dept.’s estimate/forecast.
AR = actual result.

28/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

8． Growth Strategy◆ Management Indicator Targets and Areas of Focus
In 2012, the Company announced its group’s management indicator targets
as Y20 billion in sales (actual result for FY 2019 was Y11.4 billion), 2.5% in
DOE (FY 2019 actual: 1.8%), and 80,000 corporate customers for the cloud(a little over 12,000 as of the end of March 2019), and has been developing
its business in line with this plan. To achieve these targets, five areas of focus
have been set: 1) become even greater as No. 1 in the cloud-based enterprisesystem software market, 2) enhance the solutions to provide more than simple
functionality, 3) further advance the technology of PCA Cloud, 4) pursue newservices, and 5) actively conduct M&As.

◆ New Medium-to-Long-Term Vision PCA Vision 2030: 1stStage – Medium-Term Business Plan to 2021

 In November 2018, PCA

Vision 2030: 1st Stage –Medium-Term Business
Plan was announced.

In June 2018, Fumiaki Sato, who was previously executive vice president,
was promoted to president and created a new operating framework for theCompany. The core concept “PCA4.0” of the medium-to-long-term vision
PCA Vision 2030 was announced in May 2018 and is summarized in Figure
24 and Figure 25 on page 30. The Vision was created in line with the fact that
the Company will reach a milestone in the year 2030 as its 50th anniversary.
Then, as the next and further step, the Company announced in November the
PCA Vision 2030: 1st Stage – Medium-Term Business Plan to 2021.
As a side note, the Company has categorized the 50 years from 1980 to 2030
into four phases of business development as follows: 1980 to 1998 as“PCA1.0,” the period of transition from small business computer to PC; 1998
to 2008 as “PCA2.0,” the period of flourishment of the internet and client
servers; 2008 to 2018 as “PCA3.0,” the period of transformation of internet
into infrastructure and popularization of the cloud; and 2018 to 2030 as“PCA4.0.”[Figure 24] The New Medium-to-Long-Term Vision PCA Vision 2030
Long-Term
Become a management-supporting company focusedon supporting the management of customer
companies by increasing the variety of one-stop
services for corporate management and operation

 当調査部では、中期の年間利益成長率を 5~8％予想。

The 5 0 th anniversary
Medium-Term
Promote the development an organization that isready to create new businesses/products/services
ahead of changes in the society

Short-Term“Plant the seeds” for reviving/strengthening our power
to earn money. Enrich and put onto growth track our
original products, the cloud, and maintenance service.
Target period of current mediumterm business plan

2018

2019

2020

2022

2023

2030
2029
2028

2025

2026

2027

2024

2021

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

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

29/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019[Figure 25] Overview of the Core
Concept “PCA4.0” of the Mediumto-Long-Term Vision

PCA4.0 [Becoming a Problem-Solving Service Provider]
1. Service-oriented creation of products
2. Sales partnership enriched by solution proposals
3. Strengthening digital direct marketing
4. Enhancing customer contact and relationship
5. Implementation of strategic recruitment, training, and evaluation programs
6. Development of flexible organizational and operational systems(Ref) Prepared by AlphaWin Research Dept. basedon the Company’s FY 2019financial results briefing
materials

In the medium-term business plan, the Company described its medium-tolong-term vision that it will continue to be a company that contributes tosociety as a “management-supporting company” that supports the smoothmanagement and operation of other companies mainly by providing
enterprise system software that realizes high-level automatization.
In the recently annouced PCA Vision 2030: 1st Stage – Medium-TermBusiness Plan (FY 2020 – FY 2022), the Company stated that its basic policy
over the medium term is to “conduct structural reforms and develop businessplatforms so that business will continue to exist and develop stably over thelong term.” Aiming to become a solution-providing service providor, theCompany’s plan for the medium term is to focus on creating a firm earnings
base and management system for the realization of its medium-to-long-term
vision.
 Reinforcement of
product creation,
adoption of the annual
plan system, and reformof the HR system wereadded as key measures.

The basic strategies based on the basic policy, as well as their summaries andmeasures, are described below (Figure 26). The medium-term business plan
has not been changed, but in comparison with the past version, reinforcementof product creation has been added as a basic strategy (IV). In addition, in III,
adoption of the annual plan system (1) and reform of the human resources
system (4) were added as key measures (shown in red in Figure 26). In
addition, an execution roadmap has been set for each measure, making theirschedules more specific.

[Figure 26] Basic Strategies and Their Summaries and Measures[PCA Vision 2030: 1st stage – Medium-Term Business Plan to 2021]
Basic Strategy

Summary and Measures

I. Build the earnings base for the main businesses

1. Strengthen and increase thesales of PCA Cloud

Will work on PCA Cloud, for which it has a rich productlineup and over ten years' worth of business know-how. Will
secure a firm position in the market and build a strong
earnings base as one of its main businesses by focusing on
improving brand power, finding new Web-API partners,
strengthening
servicefunctions,andstrengthening
cooperation with specialists (professionals) in accouting
offices, certified social insurance and labor consultant offices,etc.

2. Strengthen the on-premises
businessEngage in strengthening the on-premises business (sales andmaintenance of the on-premises) by reviewing the products,
service system, etc., based on the users' needs. Will make atransition from the on-premises to the subscription-basedmodel, as well as improving the maintenance contract repeat
rate and operation productivity.

II. Create new business opportunities
In an aim to create a new earnings base for the future. Will

accelerate its progress with creating new business 当調査部では、中期のopportunities by establishing a division (called "General
1. Find the "seeds"of new
年間利益成長率を
Innovation Office" for now; established in Jan. 2019) tasked
products and businesses
with the role to find the seeds of new products and businesses
5~8％予想。 related to new technologies such as AI, big data, RPA, and
FinTech.

2. Renew efforts to develop the
mid-tier company market

With the new Hyper Series, renew efforts to develop the midtier company market, which is an attractive market since it
encompasses the upper zone of the Company's major
customers and has the capacity to bear large system
investment costs.

(Ref) Prepared by Alpha-Win Research Dept. based on an excerpt fromthe Company’s FY 2019 financial results briefing materials

30/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019
Also, the Company has annouced the following new numerical targets for FY
2022, the final fiscal year of the medium-term plan (the fiscal year ended
March 31, 2022) (targets for each year have not been disclosed; please refer
to Figures 27, 28, and 29).
[Figure 27] Targets of the Medium-Term Business Plan

(Ref) Figures 27–29 were prepared by Alpha-Win Research Dept. based on excerpts from the Company’s FY 2019 financial results
briefing materials. Forecasts/targets (E) are those announced by the Company.

[Figure 28] Financial Results Forecast in the Medium-Term Business Plan (consolidated)[Figure 29] Sales Forecast for the Subscription-Based Businesses

31/41This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019◆ Alpha-Win Research Dept.’s Financial Results Forecast
for the Medium Term
 We revised the previous
forecast for next fiscal
year’s financial results.
Sales were kept thesame but the costestimates were reviewed
and profit was revised
upward.

We revised this fiscal year’s forecast as well as next fiscal year’s sales andprofits, and also newly added a forecast for FY 2022 (Figure 30).
The revisions that we made to the financial results for next fiscal year (FY2021) are as follows (original forecast: report issued on February 15, 2019).
We made an upward revision to the profits despite keeping the sales
unchanged since we have reevaluated the cost estimates (for instance, sales
promotion expenses could be cut down more).
[Figure 30] Financial Results Forecast for FY 2021 (next FY)(Ref) Predicted and prepared by Alpha-Win Research Dept.

 In FY 2021 (next FY),
sales and profit may
temporarily decrease ina fallback from theevent-driven highdemand. However, thescale of the fallback is
expected to be limited.
 In FY 2022, theCompany will havealready gone throughthe fallback from theevent-driven highdemand, and business is
expected to return tonormal, increasing sales
and profit again. The
Company’s targets in its
medium-term plan arewithin an achievable
range.

For next fiscal year, we have not changed our view that sales and profits will
decrease due to the expected fallback from this fiscal year’s high financial
performance after the event-driven high demand (estimated by the Company
as appoximately Y1.1 billion for this fiscal year), although the phenomenon
is thought to be temporary. However, we believe that a full fallback will be
prevented by the support of the stable, existing subscription-based businesses
as well as by the new contracts for the still-growing cloud and labor
management software business to some extent. Therefore, we are expecting
a smaller fallback compared to the previous fallback after the high demand
from past two events (in the previous fallback, in the order of FY 2014 →FY 2015: sales of Y10,425 million → Y8,168 million; recurring profit ofY1,139 million → -Y158 million; and a net loss).
Furthermore, concerning cost, since various costs have been recorded aheadof schedule up through this fiscal year, there seems to be some room foradjustment. Therefore, we have judged that the decline in profit shall not be
as great as would normally be expected from the rate of decline in sales andhave revised our original forecast upward.
Also, although the Company's targets for the fiscal year after the next (FY
2022, the final year of the medium-term business plan) are somewhat high –consolidated sales of Y11.5 billion and operating profit of greater than Y1.5
billion – they seem to be within an achievable range under the right conditions.
At this point, our forecast is somewhat conservative, with sales of Y11.6
billion and operating profit of Y1.4 billion, having taken into account the risk
factors. Also, based on the dividend payout ratio, we believe that a dividend
hike will become a possibility when the targets are achieved (Figure 23 shown
previously on page 28).
32/41

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

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

Issued: 6/25/2019
Furthermore, for the estimated annual sales growth rate for each category(sales type) for FY 2020 and FY 2021, we changed the estimate for the
maintenance service from about 1.5% in the previous forecast to 0.5% andused estimated rates of about 20% for the cloud service and about 1-5% foreach of the remaining three categories (products, goods, and solutions)(evened-out figures excluding the effect of the event-driven high demand).

 Should keep an eye out
for new technology, newproducts, and new
businesses

Each sales category’s amount of contribution to the expected gross margin
was not largely altered, but instead we focused our analysis on the positiveeffect of improved product mix, such as the cloud, on the gross margin. Also,
although the Company is in an investment phase, which includes businessstructure reinforcement in preparation for future growth, new productdevelopment, and technology research necessary for the product development(virtualization technology, AI, Web API, and FinTech-linked technology),
we predict that the general and administrative expenses – especially the sales
promotion, R&D, and personnel expenses – are controllable to some extent.
No extraordinary gain or loss is expected.
Going forward, there seems to be several factors of uncertainty, such as the
anticipated rise in consumption tax, occurrence of and fallback from the highdemand related to Windows 7 support termination, new tax laws andregulations or changes in the laws and regulations, progress with new productdevelopment and new businesses (transition from the on-premises to thesubscription-based model, situation with the sales of the Hyper Series,
financial performance of the data utilization business of the acquired
Keepdata, etc), changing balance in the competition with major competitors
in the cloud business, and the progress with the M&A strategy.
However, since the Company is in a phase where its subscription-based
businesses are continously expanding, we believe that the when the fallback
from the event-driven high demand settles down and if the Company is able
to put the new businesses described above onto a succesful track, then the
Company will be able to enter another growth phase and begin to increase its
sales and profits again starting in FY 2022.

 With the subscriptionbased businesses as thegrowth driver, annual
profit growth rate is
expected to be about 810% over the medium
term based on evenedout figures.

Over the medium to long term, based on figures that are evened out excluding
the effect of the event-driven high demand, we are expecting an annual sales
growth rate of around 6-8% and an even greater net profit growth rate (8-10%
per year). Although upfront investment costs for new business domains willcontinue to be incurred, since the Company’s business model is characterized
by a high marginal profit ratio, we believe that the profit growth rate will
exceed the sales growth rate. In addition, the shift to the subscription-based
business is expected to improve the stability of financial performance.

33/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019

9． Analyst’s View
◆ PCA’s Strengths and Challenges
The Company’s SWOT analysis results are listed in Figure 31.
[Figure 31] SWOT Analysis(Ref) Prepared by Alpha-Win Research Dept.

 Long years of trust andtrack record, customer
base, and technologicalskill are its strengths.

 Top-levelcompetitiveness andachievements with thecloud. The cloud market
has a high growthpotential.

 Improved profitability
and stability with thetransition to thesubscription-based
business model.

Describing the strengths listed in Figure 31 in more detail, the Company iswell known due to its long years of practice in the industry and the trust thatit has earned over those years. It is especially strong in certain areas ofbusiness such as accounting software for small/medium-sized companies andpublic benefit corporations. Its customers also have high loyalty, as there islittle incentive to frequently change enterprise system software. Additionally,
the Company has been developing a subscription-based business model withhigh continuity and stability by providing maintenance support, the cloud,and version upgrades to its customers.
On the other hand, looking at the weaknesses in more detail, profitability has
been an issue as the margins had been gradually decreasing over many years.
In fact, the margins are still low compared to its major listed competitors.
This may be explained by how the proportion of users signing a contract forthe profitable maintenance service is low for the Company compared to its
competitors, by the low sales growth rate of the maintenance service, and by
how the Company has not been developing major, long-lasting new products(not being able to benefit from the advantage of scale). However, theoperating margin has been recovering sharply in the past four years and hadrisen to 10.9% in the previous fiscal year. In recent years, the Company isworking on shifting to the subscription-based businesses with the cloud andis showing signs of changes in the revenue structure.
34/41

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

Alpha-Win Company Research Report
PCA (9629 TSE First Section)
 Increase in the

proportion of users
signing a contract forthe maintenance service
for the on-premises will
create a large potential
for improved earnings
capacity.

Issued: 6/25/2019
If the Company could dig up hidden demand from its growth-driving, cloudrelated market with its price advantage, and if it could improve the onpremises business by shifting to the subscription-based model and increasing
the proportion of users subscribing to the maintenance service, then the
Company may be able to improve its profitability. For instance, even just by
raising the proportion of users signing a contract for the maintenance service
from the current 50% (approx.) to the same level as OBC (about 80%) or MJS(nearly 100%), the gross margin would theoretically improve by a few points
in each case compared to last fiscal year’s 57.0%.
As for the opportunity and threat, occurrence of events such as theconsumption tax revision and work-style reform that we currently see will
induce a high demand related to the event, which would tend to cause higher
volatility in financial performance before and after the event. Also, we should
keep note of the progress of major competitors in catching up with theCompany in the cloud-service market, in which the Company currently takes
a lead, and in their development of new products and services.

◆ Shareholder Return and Shareholder Benefit Program
The Company’s basic policy is to stably, constantly pay dividend while
improving the ratio of net profit for the year to shareholders’ equity (ROE)
under an effective management. In returning profit to its shareholders, its
policy is to determine the level of dividend to be paid based on acomprehensive analysis of elements such as its financial results and dividend
payout ratio.
Regarding dividend, ever since the first public offering of the Company’s
stock, ordinary dividend has not been decreased and has been gradually
increasing over the long term with several years of no change in between(Figure 32 on page 36).
Excluding commemorative dividends, ordinary dividend since FY 2011 has
been kept at Y31 per share per year. Only in FY 2014 was a commemorative
dividend paid; in celebration of “the achievement of consolidated sales of
Y10 billion,” Y10 was added to the ordinary dividend of Y31 to an annual
total of Y41 per share. Even in FY 2015 and FY 2016 when a net loss wasposted, the Y31/year dividend was maintained in line with the Company’s
stable dividend policy

 The Company’s goal for
dividend payout ratio is
30% and its goal for
DOE is 2.5% but theactual percentages arelower. It has been stably
paying a dividend of Y31
per year for many years.

The target for dividend payout ratio is 30%, but the actual percentages were
48.2% in FY 2018 and 23.3% in FY 2019, the Company’s forecast for FY
2020 is 21.1%, and our forecast is 19.6% – all below target. The dividend
yield is 0.9% when calculated based on a stock price of Y3,465 (closing priceon June 14, 2019). Also the DOE, which is one of the KPIs (key performanceindicators) that the Company focuses on, was 1.9% and 1.8% in FY 2018 andFY 2019, respectively, both below the Company’s target of 2.5%.
Under its policy to continuously and stably pay dividend, the Company plans
to maintain an annual ordinary dividend of Y31 in FY 2020. We believe that
there will be potential for a dividend hike over the medium term as upfront
investment costs come to an end and profitability improves.
A shareholder benefit program was started in 2013, and its partial revision
was annouced in July 2017. Spcifically, a Quo Card is granted to shareholders
based on the number of shares held at the end of the March of every year. For
example, shareholders with equal to or greater than 100 shares and less than
300 shares are granted Y2,000 worth of Quo Card; assuming that the stock
35/41

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

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

Issued: 6/25/2019
price is Y3,465 (closing price of June 14, 2019), then the actual annual net
yield for a shareholder with 100 shares is about 1.5% (at maximum) including
the ordinary dividend of Y31 and the shareholder benefit (Figure 33). Under
the same condition, the actual annual net yield for OBC is about 1.6%, andfor MJS it is about 1.1% which is the same as the dividend payout ratio since
MJS has no shareholder benefit program.

 The actual annual net

yield including theshareholder benefit
plan is about 1.5% (atmaximum).

The Company’s financial standing is great with essentially no debt. We
should keep an eye out for stock splits, since the stock price had risen, as wellas additional share buyback in terms of the total return ratio over the medium
term. A stock split has not been conducted since the 1-to-1.3 stock split in
May 2000.
[Figure 32] Transition in Dividend and Dividend Payout Ratio(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecast (E) were made by the Company andAlpha-Win.

[Figure 33] Shareholder Benefit Program and Net Yield
Number of Shares Owned(greater than or equal to)
100

300

Shareholder Benefit(Quo Card: Y)
2,000

31

1.47

500

3,000

31

1.18

5,000

31

1.18

(less than)

300
500

Dividend: Y

Net Yield (maximum): %Net yield = (dividend + benefit value) / (stock price) was calculated for the minimal amount of stock owned in each range
Stock price: Y3,465 (closing price on 6/14/2019)(Ref) Prepared by Alpha-Win Research Dept.

◆ Stock Price and Factors that May Affect Stock Price Thanks to the upwardrevision to financial
results, stock price rose
sharply and is largely
outperforming the
TOPIX.

The Company’s stock price and relative stock price compared to TOPIX forthe past three years are described in the summary section (Figure C on page3). The Company’s stock price has been rising since around October 2018,significantly outperforming the TOPIX. In particular, after theannouncement made in February 2019 of a significant upward revision to lastfull fiscal year’s financial results, the stock price soared, reaching Y4,075,
the highest price since becoming listed on the market, on May 13. The stock
price has remained firm since then, probably because the Company has been
36/41

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

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

 Earning higher valuation,

seen as a defensive andstable growth stock The rise in consumption
tax and the work-stylereform are positive
factors for the Company.
Not affected by tradewars.
 Valuation indicators arehigher than the averageof the TSE First Section
but cheaper than its
competitors.

Issued: 6/25/2019highly evaluated by its investors for last fiscal year’s upward revision, thisfiscal year’s significant rise in sales and profits from the event-driven highdemand, and the direction and achievements of its management reform. In
addition, the Company has become recognized as a domestic-demand-related
stock with stable business results that can benefit from the rise in
consumption tax and the government’s work-style reform despite theincreasing uncertainty of the global economy (trade war, etc.) and thefinancial performance of Japanese companies starting this fiscal year.
Another factor contribution to the high evaluation is its high competitivenessand potential due to its pioneering activity in providing packaged enterprisesystem software via the cloud.
A comparison of major valuation indicators was made between the Company,
the market average, and its listed competitors (Figure 34). Since theCompany’s stock price had risen, its P/E for this fiscal year is predicted to beapproximately 23.6 (based on EPS estimated by the Company for FY 2020;
according to our prediction, 21.9 for this fiscal year and 28.8 for next fiscal
year), exceeding the TSE First Section’s average of about 13.4. While theCompany’s dividend yield, at 0.9%, is slightly below the average of the First
Section (the simple average is 2.1%; the weighted average is 2.6%), theCompany’s P/B is 1.9, which is higher than the First Section’s average of 1.1(based on the closing price of June 14). Meanwhile, compared to its
competitors (4733 Obic Business Consultants or OBC and 9928 Miroku
Jyoho Service or MJS), while their difference is becoming smaller with the
sharp rise in the Company’s stock price, many of the Company’s indicators
are still relatively low, giving it an undervalued impression (Figure 34). The
Company’s P/B, P/S, and EV/EBITDA values are especially low.

[Figure 34] Comparison of Valuation Indicators with Competitors
Company Name

PCA (consolidated)

Obic Business Consultants(OBC: non-consolidated)

Miroku Jyoho Service (MJS:
consolidated)

4733

9928

[Figure 27] Comparison of Valuation Indicators with Competitors
Code
Stock Price (at 6/14 closing)Market Cap (Y mil)P/E (price-to-earnings ratio)
P/B (price-to-book ratio)
Dividend Yield (%)
EV/EBITDA
P/S (price-to-sales ratio)

9629
3,465
26,681
23.6
1.9
0.9
11.3
2.1

5,150
415,626
38.4
3.4
1.0
23.6
13.9

3,505
121,996
29.4
6.0
1.1
19.5
3.6

Market cap = shares outstanding x market stock price [at 6/14 closing]
EV/EBITDA = (market cap + interest-bearing debt - cash & deposits) / (O.P. + depreciation + intangible fixed asset amortization, etc.)
P/S = market cap / sales [the companies' estimate for FY 2020]
The companies' estimated EPS for FY 2020 used in all P/E calculations(Ref) Prepared by Alpha-Win Research Dept. based on information including those from the securities report and the financial results summary During the past two

years, the Company’s
stock has beensignificantly
outperforming its twocompetitors.

Additionally, in the past two years, the Company has been largely
outperforming its two competitors OBC and MJS by 56% and 84%,
respectively (Figure 35 on page 38).

37/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019[Figure 35] Comparison of Stock Performance with Competitors (Note: stock price as of the end of June 2017 was set tozero upon creating the graph)

160%
140%

PCA 9629

OBC 4733

MJS 9928

120%(Ref) Prepared by AlphaWin Research Dept.

100%
80%
60%
40%
20%
0%
-20%
8
8
8
8
8
8
8
8
8
8
8
8
9
9
9
9
9
9
7
7
7
7
7
7
7
01 20101
01
01 201
01
01
01
01
01
01
01
01
01
01
01
01
01 20101
01
01 201
01
/2
/
/2
/2
/2
/
/2
/2
/2
/2
/2
/2
/2
/2
/2
/2
/2
/2
/2
/
/2
/2
/2
/2
/
11
11
01
02
03
04
05
06
07
08
09
10
12
01
02
03
04
05
06
06
07
08
09
10
12

Going forward, the following events or factors may have an impact on stock
price.

 Going forward, the key

points of interest are theprogress with the new
businesses and financial
performance over the
medium term including
this fiscal year.

The first factor to note is the financial performance (growth) for this fiscal
year. We believe that, by around the end of September 2019, full-year sales
including the effect of the event-driven high demand will be mostly
predictable. The points of interest are the contents of the second or third
quarter results that will be disclosed around November or next year’s
February, whether or not the full-year financial results forecast will berevised, and the extent of such revision. Although the trend in demand during
this fiscal year’s second half is uncertain, as stated earlier, the Company's
profit forecast for the current fiscal year seems conservative. The stock priceseems to already reflect the expectation for an upward revision to some extent,
but there seems to be room for a further rise depending on the extent of therevision.
In addition, next fiscal year, there is a concern that the fallback from theevent-driven high demand may negatively impact the financial result.
However, since the subscription-based business is in a phase of continuous
expansion, if the Company succeeds in putting the new business currently inprogress on track, we expect that the Company will be able to enter anothergrowth phase and continue to increase sales and profit over the medium tolong term. Therefore we believe that the Company will be able to keep thenegative impact limited. The Company’s medium- to long-term businessplan is to execute growth strategies including the expansion of businessdomains, M&As, and alliances, improve its management system from salesbased to profit-based management, and shift to a management system
focused on asset efficiency. When the market confirms the positive effectsof these strategies on profit, then the stock price may rise.
Additionally, other factors that may affect stock price include the rate ofincrease in the number of contracts for the cloud service, the sales growthrate of the subscription-based businesses, the improvement of margins, theprogress with new products and services (utilization of data, etc.), theprogress in increasing the proportion of users who subscribe to themaintenance service, dividend increase, stock-splits, enhancement of theshareholder benefit plan, progress in shifting from the on-premises to thesubscription-based business model (a monthly-charging subscription-based
business), and progress in acquiring new mid-tier corporate customers with
the Hyper. We should continue to check these factors.
38/41

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

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

Issued: 6/25/2019

10． (The 2nd) Interview with the President◆ Q&A
On June 7, 2019, we conducted a second interview with the Company’s
president Mr. Fumiaki Sato (below is the summary of the interview).

1. About one year has passed since you became president, but what do you believe are the futurechallenges or the matters that you are currently most focused on?
⚫ Under the idea that we should change our business model and our company, we haverepeatedly conducted various discussions within our company and have implemented various
measures. In the near future, we would like to shoot a new “arrow” and achieve greater results. As
the company changes, I believe that it is my mission as president to work on creating a consensus
within the company and unifying the direction of all of our members, and I will work on improving
our financial results.
2. You are expecting sales and profits to rise again this fiscal year. The forecast seems conservative, but
how do you think of this?
⚫ We are a down-to-earth company, and please understand that the disclosed targets are values
that we would definitely like to achieve. We cannot mention the specific figures, but we would liketo try to exceed the targets that we have announced. It may be possible for us to make more profit
during this fiscal year, but in order to create more popular software for the cloud and the products
in preparation for future growth, we have set aside a relatively large amount for the costs such as
sales promotion expenses (expenses for advertising, enhanced website, etc.).
3. Please tell us about your forecast and strategy for the next fiscal year and onward when there will bea fallback from the high demand triggered by several events.
⚫ Due to events such as the consumption tax revision that will start in October of this year andthe termination of the Windows 7 support in January of next year, we are seeing high demand
related to replacements of the OS, leading to replacement of PCs, leading to replacement of software,
implementation support, cloud contracts, and so on. The amount of demand was a little less than
one billion yen in the previous fiscal year and is expected to be around 1.1 billion yen for this fiscal
year.
⚫ Due to a fallback from the two years of high demand driven by various events, we predict thatnext fiscal year there will be a temporary decline in sales and profits. However, we plan to takemeasures to reduce the impact as much as possible. Specifically, we intend to further shift ourbusiness toward the subscription-based business model (accelerated expansion of the cloud business,transition of on-premises to a subscription-based business model, etc.) that we believe will provide
us with stable earnings. Since we have already been making the transition to the subscription-based
business with the cloud, (next fiscal year) we believe that the fallback from the event-driven highdemand should not be as great as the last one, and we would like to aim for that to happen. Also,
there will be high demand from the work-style reform over the medium term, so that the sales ofour subsidiary Xronos (labor management system) would most likely keep growing at a steady pace.
With such increases in sales, we hope to make up for the decline in sales due to the fallback fromthe event-driven high demand, and then start increasing sales and profits again in the fiscal year
after the next or fiscal year 2022, and thus achieve our medium-term business targets.
⚫

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

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

Issued: 6/25/2019

I believe that it is also my responsibility as president to strengthen our foundation as a company sothat we can provide new services alongside our customers and grow with our customers. We believethat out current task is to put the new products and services on the track to success to enter anothergrowth phase over the medium to long term.
4. Could you tell us why you decided to acquire Keepdata Ltd. (hereinafter, "Keepdata"), its businessdetails, business conditions, and future synergy with your company?
⚫ On March 28, 2019, we acquired Keepdata Ltd., whose strength includes its utilization of big
data and its file-sharing system that uses the cloud. It developed and possesses a proprietary systemcalled KeepData Hub that can perform real-time integration of various big data such as IoT,
operation software data, and public open data and enables the one-stop accumulation, aggregationand visualization of the data.
⚫ Although the company had posted a net loss due to system development costs, the systemdevelopment has been completed and the company is providing service under a subscription-based
business model toward large companies. We believe that its sales could be improved and profit
could (eventually) be made. Keepdata will join us as a consolidated subsidiary starting this fiscal
year, but we have not largely reflected it in our forecast for this fiscal year.
⚫ In the future, we hope to create synergy, for instance, by merging the technology development
skills of our company specialized in operation software with Keepdata and provide new datautilization services that target small- and medium-sized companies. As a management-supporting
company that supports the management of small- and medium-sized companies, we believe that it
would be a business with an important role.
5. Could you tell us about the new product (Hyper) or new service (transition of the on-premise to thesubscription-based business model) or other products or services, especially about their aims, the outlineof their plans, and their expected contribution to financial results?
⚫ We launched the Hyper (PCA hyper) with the aim of expanding our customer zone to mid-tiercompanies and promoting the transition to cloud-based software. Although the target customer
zone is the same as the previous Dream 21, Dream 21 did not support the cloud. So we developed
the Hyper that can support both the on-premises and the cloud. During this fiscal year, we will start
selling six types of software. However, since our priority for this fiscal year is the event-driven highdemand, we believe that the contribution of Hyper to financial results will start next fiscal year.
⚫ Also, in 2022, we plan to shift from the on-premises to the subscription-based model, and weare currently preparing for this. We will always provide the latest software also as on-premises
while shifting to subscription-based businesses. By changing to the subscription-based businessmodel, efficient management of function maintenance, especially of the latest software, will become
possible. As a result, it would lead to cost improvement.
6. If you have any other message for stakeholders, including shareholders, please tell us.
⚫ By establishing a business model that will enable us to enter another growth phase and firmly
make profit even after the event-driven high demand ends, we hope to create (a higher) shareholder
return.
End of Interview
40/41
This Alpha-Win Company Research Report (hereinafter this “Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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

Issued: 6/25/2019＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-WinCapital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win
shall not be liable for any consequences including direct or indirect loss, lost profit, or damage
resulting from the use of or reliance on this Report. Investors who read this report must make theirown decisions on all investment matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally
accessible public information and supplemental information including interview(s) by the analyst. AlphaWin, the writer, and/or other persons involved in the publication of this Report may already hold, or buy
and sell in the future, the stock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject tochange without notice. We do not warrant or represent that the information in this Report isaccurate, reliable, complete, appropriate, or fit for any purpose and do not accept any responsibility
or liability.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied,cited, or translated without our consent.
For inquiries regarding this Report, please send us an e-mail to info@awincap.com. However, Alpha-Win
and the writer of this Report do not have any obligation to reply to inquiries.
PFV2019-0625-17

41/41
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.