TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance7483
TSE 1stSectionNovember 28, 2014

DOSHISHA CORPORATION
Summary of Financial Results for the Second Quarter of
the Fiscal Year Ending March 31, 2015

DOSHISHA CORPORATION (hereafter DOSHISHA or the Company) held an analyst meeting for its
first-half (Apr-Sep; hereafter 1H) FY3/15 financial results on November 13. Following the meeting, We,
Trias Corporation (hereafter Trias), conducted an interview with the Company, and are pleased to reporta summary of the results and management views mentioned in the meeting and interview.

1H FY3/15 Consolidated Financial Results Summary
The 1H results fell short of the Company’s forecasts, with net sales and ordinary income both decreased
2% YoY, due to after-effects of April sales tax hike and unfavorable summer weather. Meanwhile, theCompany kept its full-year guidance on hold on the back of healthy order inflows it is enjoying recently
and raised dividend per share to ¥20 from initially planned ¥18 for the 1H and to ¥40 from ¥36 for the full
fiscal year ending March 31, 2015.
As the Table 1 shows, the 1H saw net sales of ¥48,767mn, or down 2.4% YoY, gross profit ¥11,747mn,
up 0.8%, SG&A expenses ¥8,873mn, up 2.8%, operating income ¥2,873mn, down 4.9%, ordinary
income ¥3,022mn, down 1.8%, and net income ¥1,988mn, up 11.7%.
Despite weaker sales from a year ago, with gross profit barely increasing, its margin to net sales
markedly improved to 24.1% from 23.3% a year earlier, thanks to newly introduced and renewed
products designed to absorb negative impacts form the weaker yen and the Company’s reviews on
unprofitable products. While operating income decreased year-on-year, hit by sharply increased logistics
expenses and wage hikes, ordinary income fell only slightly thanks to foreign exchange gains posted in
non-operating income/expenses account. The sharp increase in net income was helped by extraordinary
income from a merge among overseas affiliates.
By business model, Product Development Model sales dropped 3.3% and Wholesale Model sales
dipped 1.6% YoY. In the Product Development Model segment, TV sets and seasonal items fared poorly
due respectively to weak demand post the sales tax hike and unfavorable weather conditions in thesummer, although new category products were strong as they reflected consumer needs quickly. The
Wholesale Model segment, on the other hand, was relatively steady despite weaker sales compared to ayear ago. The NB Processing business secured a-year-ago sales level and the Premier Brand operation
enjoyed exceptionally strong “inbound demand” from Japan visitors mainly from mainland China
This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|1

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

although the whole merchandize sales fell year-on-year.
SG&A expenses rose by ¥238mn YoY as logistics expenses soared by ¥165mn and personnel expenses
rose ¥96mn mainly driven by implementation of employee stock options. The Company explains its
efforts to reduce logistics expenses are yet halfway to its targets but progressing steadily. Its set-up of alogistics base in eastern Japan (Kashiwa City in Chiba Prefecture) has been gradually optimizing
product distribution and bundled shipping and co-shipments among divisions seem to have shown
visible effects.
Non-operating balance was a positive ¥148mn, improving ¥93mn from a year ago thanks mainly to again on forward exchange contracts of ¥44mn brought by the weaker yen. Accordingly, ordinary income
declined only slightly and net income jumped 11.7% YoY, bolstered by a ¥158mn gain on sales ofoverseas affiliate shares.

 【Table 1】 1H FY3/15 Consolidated Business Results Summary
Consolidated

1H FY3/14

1H FY3/15

1H FY3/15
8-May

YoY Changes

Ratio toRatio to（\ million）

Actual Net Sales

Actual Net Sales

AmountRatio

Forecast

Amountvs. actual
Ratio

Net Sales

49,978100.0%

48,767100.0%(1,211)-2.4%

50,600(1,832)

-3.6%
-4.2%

Product Development

25,06450.2%

24,225

49.7%

(838)

-3.3%

25,300(1,074)Wholesale

23,081

46.2%

22,712

46.6%

(369)

-1.6%

23,100

(387)

-1.7%

Others

1,832

3.7%

1,829

3.8%

(3)

-0.2%

2,200

(370)

-16.9%

Gross Profit

11,65723.3%

11,747

24.1%

90

0.8%

12,150

(402)

-3.3%

SG&A Expenses

8,634

17.3%

8,873

18.2%

238

2.8%

8,550

323

3.8%

Logistics Expenses

2,703

5.4%

2,868

5.9%

165

6.1%

-

-

-

Personnel Expenses

3,683

7.4%

3,779

7.7%

96

2.6%

-

-

-

Others

2,579

4.5%

2,225

4.6%

(22)

-1.0%

-

-

-

Operating Income

3,022

6.0%

2,873

5.9%

(148)

-4.9%

3,600

(726)

-20.2%

Ordinary Income

3,078

6.2%

3,022

6.2%

(56)

-1.8%

3,600

(577)

-16.0%

1,780
3.6%
1,988
4.1%
207
11.7%
2,200
(211)
Net Income
Notes: 1H FY3/15 forecasts are based on the Company's initial guidance dated May 8, 2014.
All tables/graphs are prepared by Trias Corp. with the data disclosed by DOSHISHA CORPORATION.

-9.6%

 【Graph 1】 Trend of 1H Profit Margins
50.0%

60

50.9
40.0%

39.6
30.0%

20.0%

10.0%

46.9

49.9

48.7

(¥bn)
50

41.7

25.4%

25.5%

18.0%

18.1%

24.5%
16.3%

7.4%

7.4%

8.2%

1H

1H

FY3/10FY3/11

25.1%
18.2%

23.3%

24.1%

17.3%

18.2%

6.9%

6.0%

5.9%

1H

1H

1H

1H

FY3/12

FY3/13

FY3/14

FY3/150.0%

40

Consolidated Net Sales

30

Gross Profit Margin20

SG&A Expenses Ratio

10

Operating Income Margin

0

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|2

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

As for the balance sheet, total assets increased ¥3,205mn, with no particular items needed to makenotes. Major factors include a ¥1,467mn rise in cash and deposits and a ¥1,309mn increase ininventories prepared for year-end demand. Compared to a year earlier, total assets rose ¥4,591mn.
Free cash flows, supposedly prepared for future business strategies, increased to ¥2,914mn at end
September from ¥1,551mn a year earlier and a rise in cash and cash equivalents during the 6 months
expanded to ¥1,467mn from ¥1,013mn a year ago. As a result, cash and cash equivalents balance roseto ¥27,701mn at end September.

1H FY3/15 Sales Trends by Operating Segment(by Business Model/Distribution Channel)

Sales Trends by Business Model
As is shown in Graph 2, every business model, i.e. Product Development, Wholesale and Others, fell
short of the Company’s forecasts and decreased year-on-year. Sharply falling demand after the sales tax
hike, unfavorable summer weather and, partially, shipment delays due to client reasons worked
negatively. However, the Company does not seem worrying the situation very seriously as its sales did
not fall as much as at other retailers in general in such adverse environments.

 【Graph 2】 Trend of 1H Sales by Business Model
Others

10.2
9.2
9.0
9.7

19.9

9.6

12.1

13.1

9.5

9.1

13.5

13.5

Wholesale (Premier Brand)

Wholesale (NB Processing)

10.5
27.4
23.4

20.5

25.0

24.2

(¥bn)

1H

1H

1H

1H

1H

1H

FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

Others

0.9

1.0

1.1

1.2

1.8

1.8

Wholesale (Premier Brand)

9.0

9.6

10.2

9.2

9.5

9.1

Wholesale (NB Processing)

9.7

10.5

12.1

13.1

13.5

13.5

Product Development

19.9

20.5

27.4

23.4

25.0

24.2

Product Development

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|3

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

Trends in each major business model segment are as follows:

Product Development Model: ¥24,225mn, down 3.3% YoY
The Product Development Model segment designs, develops and markets original products created withDOSHISHA’s own ideas and concepts, while basically outsourcing manufacture of products.
The 1H sales fell short of the Company’s target of ¥25.3bn as slower recoveries in demand after the April
tax hike prolonged disappointing TV sales, followed by weak sales in summer clothes and seasonal
appliances due both to the earlier-than-usual rainy season and torrential rainfalls which hurt foot traffic.
Meanwhile, among new categories, where the Company aims to satisfy customer needs precisely, thrift
and in-house-dining boom among consumers worked generally favorable to the segment and sales werestrong in such goods as “fluffy snow cone” maker, low-cost/high-quality LED lights, case goods including
steel racks with many color variation and shoes.

Wholesale Model: ¥22,712mn, down 1.6% YoY
The Wholesale Model segment deals domestic/imported brands and other makers’ products, with about
60% of the segment sales coming from NP Processing and the rest from Premier Brand.
NB Processing mainly covers the assortments of leading brand products such as foods, and DOSHISHA
has a strong expertise cultivated through its close ties with leading food makers. These sales for the 1H
were better than a year earlier, up 0.3% YoY though, despite challenging retail environments, thanks toparticularly strong demand for assorted gifts for families, quick/convenient food gifts for personal dining
and occasional gifts at time of yearly events including sport competition. By contrast, Premier Brand
business, chiefly made up of watches and bags, dropped 4.2% YoY in sales, suffering from after-effectsof the sales tax hike although so-called “inbound demand” rose significantly because of sharply
increased Japan visitors.

Sales Trends by Distribution Channel
This 1H saw wide divergences among distribution channels, with inbound demand causing very obvious
differences. Sales to electronics mass retailers, or DOSHISHA’s major channels for watches, jumped
12.8% YoY and those to discount/drug stores fell only slightly, by 0.7%, both driven by inbound demand.
“Others” channels were also solid, with sales totaling to up 1.6% YoY, thanks to 100 yen shops andon-line channels. Meanwhile, sales were disastrous at GMS (-19.7% YoY), super markets (-9.0% YoY)
and DIYs (-8.0% YoY), all hit by adverse sales tax and weather effects.

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|4

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

FY3/15 Financial Forecasts and Trias’s Focus
DOSHISHA kept its full-year forecasts on hold as is shown in the Table 2 despite the weaker 1H results.
Given healthy order inflows since the start of the 2H, the Company aims to offset the 1H shortfall byfocusing more on well-performing clients, including those benefitting from strong inbound demand.
Since late October, the yen has weakened quickly against the dollar compared to the end September
rate (¥109.45/US$). However, the Company says forex impacts should be limited as it had alreadyhedged ¥/US$ rates up to the 1H of the next fiscal year (FY3/16).

 【Table 2】 Summary of FY3/15 Consolidated Forecast Revisions
Consolidated

FY3/14
ActualActual（\ million）

1H

Net Sales

FY3/15October 31
Revised Forecasts
2H Full-Year[Reference]
May 8
Initial Forecasts

2H

Full-Year1H

49,97855,597 0

105,576

48,767

61,232110,000

4.2%

YoY

59,4002H Full-Year
110,000

Product Development

25,06429,728 054,79324,22533,924

58,150

6.1%

32,20057,500Wholesale

23,081

24,139 047,22022,712

25,387

48,1001.9%

25,40048,500

Others

1,832

1,729 0

3,562

1,829

1,920

3,750

5.3%

1,800

4,000

Gross Profit

11,657

12,803 024,46011,747

14,352

26,100

6.7%

13,95026,100

SG&A Expenses

8,634

8,541 017,176

8,873

8,726

17,600

2.5%

9,050

17,600Operating Income

3,022

4,261 0

7,284

2,873

5,626

8,500

16.7%

4,900

8,500

Ordinary Income

3,078

4,431 0

7,510

3,022

5,477

8,500

13.2%

4,900

8,500

17.6%

3,000

5,200

Ne Income
1,780
2,640 0
4,421
1,988
3,211
5,200
Notes 2H and full-year forecasts for FY3/15 are the Company's guidance dated October 31, 2014.
Reference figures are based on the Company's initial forecasts dated May 8, 2014.

What We Focus On Upon DOSHISHA’s 1H Results
After the analyst meeting and following interview, what Trias focuses on are following 5 points:
A) Product lines are stretching from “Spots” to “Categories”
B) Brand strategies are clearly inclining toward its own
C) Inbound demand is now becoming a new source of growthD) The weaker yen is a challengeE) Management are increasingly aware of the share price (from an equity investment point of view)

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|5

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

A) Product Lines Stretching from “Spots” to “Categories”: Integrated Shelf Space Promotion toInvite More SalesDOSHISHA was until recently marketing products individually. As a result of its developing original goods
and cultivating premier brands further, however, the number of items it sells increased sharply every year
and has reached to some 20,000, allowing the Company to design and promote wider shelf space atretail stores. Offering a set of product categories by simulating shelf space layouts best suited forparticular clients at its own showrooms, the firm is now able to aim for higher in-store market shares.
Typical examples of this effort are offerings to its large clients of shelf space and display ideas aiming to
attract inbound demand. The fact that limits of tax-free items were lifted in October should also serve asa tail wind in developing win-win relationships between suppliers and mass retail chains. Sales potential
to such large clients as electronics retailer Laox and discount store chain Don Quijote should be huge as
DOSHISHA’s in-store shares are at low single-digit at those enjoying exploding inbound demand.

B) Brand strategies clearly inclining toward its own: From background to foreground
DOSHISHA’s name is unfortunately not known very widely. This is due to the Company’s stance insupplying to retailers without exposing the company name even for its original products developed fromscratch. The Company is now changing the strategy, however, to market its own brands moreaggressively as concepts of its products have been gaining supports from retail customers. Since
February 2014, the Company has started presenting its corporate logo “DOSHISHA” on its original
products, while having appointed a powerful actor, Mr. Toru Nakamura, for its male brand of Furbo, andan emerging actress, Ms. Tao Tuchiya, who will be featured in the next year’s NHK Morning Drama
serials, to promote its female brand of Rubin Rosa; the both as poster characters.
This should increase direct exposure of the Company’s name and product brands to consumers at
leading retail chain stores, most likely fostering client loyalties as well as recognition in the equity market.

 DOSHISHA’s Original Goods Sold with the Company Name Brand

C) Inbound demand is a new source of growth: Sharply increasing Japan visitors adding sales
Sizable economic impacts from sharply increasing Japan visitors have been welcomed. Attracting Japan

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|6

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

visitors is one of the important targets of the third arrow of the Abenomics. The current administration
aims to double the number of Japan visitors, which exceeded 10 million tourists for the first time in 2013,
to 20 million by 2020. In an effort to achieve this goal, it quickly launched a variety of promotion
measures such as loosening restrictions over visa issues for tourist visiting from China and ASEAN
countries, approving much more tax-free shops and lifting limits on tax-free items.
Adding to these public measures, the weaker yen and newly offered and added flight/cruiser services
have been spurring increases in the number of Japan visitors to a record 9.74 million, or up 26% YoY, forthe first 9 months of this year, according to the Japan National Tourist Organization estimates. Especially,
Chinese tourists, who tend to spend most per head among Japan visitors, counted 1.79 million, or up
80% YoY.
As a result, leading mass retailers such as Laox and Don Quijote are enjoying big benefits, coming out
on top against DOSHISHA’s sales growth. The Company plans to respond aggressively to soaring
inbound demand, taking this as a big opportunity. It is trying to grab more demand by acceleratingproduct planning and developments which would satisfy Japan visitors’ wants and producing whole shelf
space for its mass retailer partners as well.
Should the government target realize by 2020, this would imply Japan visitors will have increased byabout 10% every year. Adding DOSHISHA’s own efforts to grow sales, it could invite even better
outcomes. We roughly calculate (*) the beneficial impact at the Company as ¥1.0bn added by just twochannels, electronics mass retailers and discount/drag stores, although it is almost impossible to figureout precise numbers.
Note*: Our calculation is only for a reference, assuming these two channels would have lost about 10% of sales, similarly
to other channels, without inbound demand.

The impact for the full-year would be nearly 2% of ¥110bn sales forecast for FY3/15, if the 2H enjoys thesame amount of ¥1.0bn in the 1H. Furthermore, the Company could enrich the benefit even more if
potential clients currently suffering weak demand turn to DOSHISHA who has “solutions” for capturing
inbound demand.
D) The weaker yen is a challenge： But already hedged up to 1H FY3/16
The yen’s weakening is theoretically negative for a company which outsources manufacture of products
and imports foreign premier brands. Roughly assuming its sales at ¥100bn and CoGS (cost of goodssold) ratio at 75%, imports value is some ¥25bn of CoGS of ¥75bn, or about $220mn at recent exchange
rates. Calculated simply, a 10 yen move toward a weaker side against the dollar could cause a negative
impact of ¥2.2bn on profits, a significant amount compared to the FY3/15 operating income forecast of¥8.5bn.
This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|7

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

DOSHISHA’s countermeasures include, for a short-term, forex hedge and giving up low margin products
and, for a longer term, product developments and renewals enabled to generate enough profits evenunder the depreciated yen. For the Company’s 1H, the average ¥/US$ rate weakened by ¥6.75 to¥102.45 from ¥95.70 a year ago in terms of the Tokyo interbank center spot rate, implying a negative
impact of nearly ¥1.5bn. The Company’s gross margin rate for the 1H, however, rather improved to24.1% from 23.3% a year earlier when it also suffered the weak yen, thanks to aforementioned
measures.
The Company in early October hedged the dollar amount which will be needed up to the 1H of the next
fiscal year (FY3/16), preparing for the risk of further weakening of the yen in the 2H and beyond. This
move effectively helped avoid forex risks which would otherwise hit the Company’s profitability as theyen sharply weakened since end October.
DOSHISHA plans to spur longer-term measures such as developing new products and re-engineering
existing line-ups adapted for the weaker yen as President Masayuki Nomura concerns “further
weakening of the yen is a big challenge.” As it usually takes about a year to develop new products, theCompany should be just entering into a critical stage toward the 2H of FY3/16 when forex hedge will runout. DOSHISHA’s profitability in the coming years should be depending on how sufficiently it can develop
new products, in our view.
In this aspect, factors that could work positively include the Company’s relatively high dependence on
seasonal goods, which would enable smooth product transition without carrying low margin products toolong and effective price hikes at the same time.
E) Management increasingly aware of the share price: Raising dividends for FY3/15
DOSHISHA revealed alongside the 1H results it would raise dividend per share to ¥20 for the 1H and¥40 for the whole of FY3/15. These are increases of ¥2 and ¥4, respectively from the initial forecast anda significant addition of ¥10 from the full-year ¥30 for the previous fiscal year. Dividend yield based on astock price of ¥1,687 on the November 28 close is calculated at 2.4% for this fiscal year.
This raise appears abrupt, given 1H incomes fell short and full-year forecasts were kept on hold, but wecan see the Company becoming more willing to respect shareholder returns particularly after Mr.
Masayuki Nomura took over the reign this April as President and CEO of the Company. To put it theother way around, the management must be increasingly conscious of its stock prices, in our view. This
may not be irrelevant to the implementation of employee stock options as they are expected to become
more aware of stock prices as well as the Company’s profit growth.
For DOSHISHA with an equity ratio of 80%, it would be hard to raise return on equity (ROE) as much as
Abe Administration touts. We view stock buybacks are more likely in the coming years, judging from
This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|8

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

recent changes we perceive from the management.

Summay of a Q&A Session at the Analyst Meeting
Q. Which firms are seen as strong competitors?
A. We see no firms directly competing with us. Within each relevant segment, however, rivals would
include Iris Oyama and Yamazen in household/appliance related markets, Ueni Trading in premier brandgoods and Itochu Shokuhin in gift assortments, each of which, however, is a single product trader orclose to it, unlike DOSHISHA which deals wide variety of products. Our product categories are such vastthat helps diversify business risks, which could be deemed as a key strength of our firm.

Q. How do you feel about the year-end shopping season just started?
A. Orders and shipments are not bad, just in line with our plans. This is why we kept our initial forecasts
intact and we are confident to offset the 1H shortfall in the 2H. That said, however, we are slightly
concerned about whether or not dissolution of Lower House and general election will take place aselections historically tended to lessen effects of sale leaflets.

Q. Would you elaborate on why SG&A expenses were overspent by ¥300mn?
A. Major items overspent were logistics and personnel expenses. Logistics expenses exceeded ourbudget by ¥165mn, hit by higher fuel prices and shortages in truck drivers. We admit our efforts tostreamline logistics were yet on the way but, if nothing was done, these expenses would have increased
by as much as ¥300mn in the 1H, hence we believe effects will become much more visible in the 2H. As
for personnel expenses, major factor was an implementation cost of ¥57mn for employee stock options,which was not counted in the original budgets.

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

|9

TAKUMA-PathfindersAn investment research platform
to support a Japanese Economic Renaissance

November 28, 2014

 Key Financial Data and Stock Indicators
Consolidated
Ordinary
Operating
Net Sales
Net Income
EPS (\)
Income(\million）
IncomeFY3/11
93,494
7,698
7,614
4,395
121.10FY3/12
102,619
8,866
8,917
5,001
137.46
FY3/1399,221
6,761
7,395
4,491
120.67
FY3/14
105,576
7,284
7,510
4,421
118.57
1H FY3/15.
48,767
2,873
3,022
1,988
53.32
FY3/15 fcst.
110,000
8,500
8,500
5,200
139.44
Note: FY3/15 forecast was announced by the Company on October 31, 2014.

No. of Shares Issued
1H FY3/15 end 37,375,636
No. of Treasury Stock
1H FY3/15 end
84,411Market Value (\mn)
Nov. 28, 2014
63,053
BPS (\)
FY3/14 end
1,408.18
ROE (%)
FY3/14 end
8.7
ROA (%)
FY3/14 end
7.0
PER (times） FY3/15 fcst. Nov. 28, 2014
12.1
PCFR (times) FY3/14 act. Nov. 28, 2014
15.5
PBR (times) FY3/14 end Nov. 28, 2014
1.2
Share Price (\)
Nov. 28, 2014
1,687
Unit Share (shs)Nov. 28, 2014
100
Average Daily Volume (shs) Nov. 28, 2014
78,417

DPS (\)
27.50
30.00
30.00
30.00
20.00
40.00

Total Assets (\mn)
FY3/14 end 64,975
Shareholders' Equity (\mn)
FY3/14 end 52,512Interest-Bearing Debt (\mn)
FY3/14 end 2,703
Equity Ratio (%)
FY3/14 end
80.8
Ratio of Interest-Bearing Debt (%) FY3/14 end
5.1
Free Cash Flows (\mn)
FY3/14
3,776
ROE=Current Net Income÷Average Shareholders' Equity
of beginning of term and term end
ROA=Current Net Income÷Average Total Assets
of beginning of term and term end
PCFR=Maket Value÷(Current Net Income+Depreciation)
Average Daily Volume=Ave. Daily Volume for the last 12 m/s
Ratio=Interest-Bearing Debts÷Shareholders' Equity
Free Cash Flows=Operating CF+Investment CF

 Share Price Charts and RSI (Nov. 28, 2013 ～ Nov. 28, 2014)（Yen）

Share Price (Close)

1 Month Moving Average

3 Months Moving Average

RSI 14 Days Moving Average (RHS)

2,000

300
250

1,500
200
1,000

150

500

RSI
100
70
50
30

0

0

Source: Prepared by Trias Corp. with Bloomberg data
Note: RSI, Relative Strength Index, is the index representing the ratio of overbought or oversold share prices. In general, over 70 in RSI
shows overbought share price range, while below 30 shows oversold share price range.
RSI=averaged share price appreciation for N days÷(averaged share price appreciation for N days
+averaged share price decline for N days) x100

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2014 Trias Corporation

All rights reserved.

| 10