ARUHI Corporation (7198.T)

Mid-term Plan

August 10, 2018
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

1

Our Starting Point： Aspiration We Put into the Name ”ARUHI”

A new life begins from “ARUHI” (one day).

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

2

Our track record for the past 10 years(mortgage loan business)
ARUHI has achieved high growth & high profitability simultaneously
KPI

Number of loan executions(volume)Number of FC stores

35,00030,0005 time growth during 10 years

25,00040

119[FYE Mar 2009]

15,00010,0000[Mar end 2018]

Market share for Flat 35 ※new loans, whole FY

20,0005,000[Mar end 2009]

Great
East
Japan
earthquake

FinancialcrisisConsump-tion tax
increase

Negativeinterest
rate[FYE Mar 2018]

8％

23％

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(FYE Mar)ARUHIの融資実行件数
Number of loans executed by ARUHI

income before tax[FYE Mar 2009※]

1.1 BnMargin 21 %Income ¥※former ARUHI（JGAAP）

Product portfolio (by interest rate type)※excluding package loans[FYE Mar 2009]

Floating/
others[FYE Mar 2018]

5.2 BnMargin 25 %23％

Income ¥Copyright© 2018 ARUHI Corporation. All Rights Reserved.

[FYE Mar 2018]

All-time
fixed

100％

All-time
fixed

77％

3

Our Business Model in Essence
An unparalleled platform company with mortgage loan business ascore business
Customer Home searching needs
 Home buying needs／Financing needs
 Renovation needs
 Home budget consultation needs
 Home selling needs

DB onproperties

Financial Institutions

DB oncustomers

DB onliving andspending

Real Estate/RE Tech Cos

 Lending needs
 Distribution needs
 Administration costdown needs
 Outsourcing needs
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

 Property selling needs
 Property advertisingneeds Financing needs
 More efficient
operations

Consumer Goods &Service Cos
 Sell products /services Customer
expansion needs
4

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

5Mortgage loan market (1)There are plenty of growth opportunities in the large and fragmented
marketGeneral view=red ocean
Population/
households

Housing
marketInterestrate

Mortgageloan market

Competitiveenvironment

 gradual decline

ARUHI’s view=blue ocean expansion of foreigners, women and the aged
segment
 concentration of population in metropolitan andcity areas decrease in newhomes being built risk for higher rates

 diverse product range will mitigate risk
 fee business model (no changes in asset value) contractionstable at 20 Tn yen1 annuallyno platformers other than ARUHI



competition diminishing as banks are scaling
down mortgage loan businessgrowth opportunities as the market isextremely fragmented (top share is only 6%)

 competition forlowering fee andinterest rates

increase in used property distribution
decrease in new homes being built, but total
distribution volume will be stable

1. Source: Japan Housing Finance Association

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

6

Mortgage loan market (2)The trend of major banks’ scaling down their mortgage loan businessmeans more business opportunities for ARUHI Ａ Bank

 cut operations for 9,500 people decrease domestic branches by 10 to 20 %

 Ｂ Bank

 cut operations for 4,000 people by the end of FY2020
 shift to smaller branches with space saving operations

 Ｃ Bank decrease 19,000 people by the end of FY2026
 decrease 100 branches by FY2024

 Ｄ Bank

 shift to smaller branches focused just on consultation
 streamline operations by introducing non-working week day
to some of the branches

Source: The Nikkei, Fuji Sankei Business Eye
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

7

Environment around housing and living

Home
searchFind andselectmortgageloans

Apply andsign formortgageloans

Live in homewhile paying
back mortgage
loans

Maintenance, renovation,
relocationunclear, complicated, time consuming

 Finding a home in a flood of information of the internet, having to look around many realtors.
 Borrowing loans are a headache because of the complicated and long process.

 Little support from financial institutions after you borrow loans. Relocation, moving in and starting a
new life is hectic and tiring.
 There still remains a strong belief that newly built homes are better. But asset value declines quickly.
Struggle to decide what to do with renovation or relocation with loans to pay back for a long time.
 Banks, Fin-tech companies, realtors, RE tech companies – there are no companies that can
provide seamless services. No platformers in the industry.
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

8

Long term vision
Contribute to achieve eco-friendly recycling society by “making
immovables movable”
solutions for social tasks

our initiatives
 Accelerate growth byMortgage
introducing diversified
loan
products, more sales
businesschannels and automation
technology (RPA1, AI2)



gratify various kinds of housingneeds propose solutions for anindividual’s needs throughhis/her life stages

 hold all deep data aroundhousing and living

“making immovables movable”
 more renovations, more
distributions for usedproperties

help evolve a sharing economy
for residential infrastructure

help achieve eco-friendly
recyling society match all needs among
Platform
parties related to housingbusinessand living utilizing technology

 connect individuals, realtors,
financial institutions, andcompanies on a platform
1. Robotics Process Automation
2. Artificial Intelligence

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

9

Financial targets
The mortgage loan business will grow CAGR10% in operating revenues and
CAGR15% in income before tax, and will reach 38 Bn yen and 12 Bn yen,respectively by FYE March 2023
operating revenues(Bn yen)income before tax(Bn yen)

100.0

40.0

38.0
Platform

20.4

5.0

12.0

Mortgage Loan

Platform

33.0
FYE Mar 2018
Actual

FYE Mar 2023
Mid-term planFYE Mar 2031

Long-term visionmortgage loan business CAGR: 10％(FYE Mar 2018 to FYE Mar 2023)
total business CAGR: 13%(FYE Mar 2023 to FYE Mar 2031)
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

1.5

5.2

Mortgage LoanFYE Mar 2018

FYE Mar 2023

Actual10.5

Mid-term planFYE Mar 2031

Long-term vision

mortgage loan business CAGR: 15％(FYE Mar 2018 to FYE Mar 2023)



total business CAGR: 16%(FYE Mar 2023 to FYE Mar 2031)

10

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

11

Target for mortgage loan businessis the largest specialist mortgage loan provider in Japan

Current status of ARUHI

Targets for
Mar 2023

1. Top player in Flat 351 for 8 consecutive
years2 with market share of 23%3

40% market
share

2. Ranked No. 54 in terms of total mortgage
loan amount with market share of 3%5

No. 1, market share
of 6%

3.

133 sales offices5 nation-wide

4. Fee-based business model with limitedbalance sheet risk

more than 250
offices nation-wide,with additional 25
each year→ the businessmodel continues

1. Flat 35: all time fixed interest rate housing loans provided by Japan Housing Financing Agency in affiliation with private financial institutions
2. Based on statistics from FY2010 to FY2017; Number of Flat 35 loans executed (ARUHI Survey)
3. Based on statistics in FY2017; Number of Flat35 loans executed (ARUHI Survey)
4. Source: Bloomberg
5. ARUHI Survey
6. As of June end 2018 (including franchise offices, directly managed sales offices and direct sales sites)

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

12

Core Competence
Focus on growth segments by utilizing our strengths
1

2 Lowest level

OverwhelmingCore
Competence speed of services（IT＆RPA1 technologies）

Focus

Targets

Used properties

rates for both
fixed andfloating rate
products

3”anytime” &”anywhere”（diverse product line-up）（omni-channel）

Floating rate

Metropolitan
areas,
city areas

 growth for mortgage loan executions：CAGR15%
 loan amount executed: No.1 in Japan（FYE Mar 2023）

1.RPA：Robotics Process Automation（initiatives for automating operations using robots）

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

13

1

Overwhelming speed

To become the best choice player by realtors and borrowers byachieving overwhelming speed
competitor
average

ARUHI’s maximum performancecurrent

targetexecution of
Flat352 to 4 weeks

６ days3 daysexecution of
ARUHI Floating S

1 to 2 weeks

５ days3 daysquick
pre-screening(N/A)

36 hours

1 min Organization with small number of talented people(number of employees: around 3001 ) Uninterrupted IT investments



1.

direct connection with Japan Housing Finance Agency
full utilization of RPA
introduction of AI (planned)

As of March end 2018（full-time employees only）

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

14

2

Entry into floating rate loan segment

Expand product line-up and grow loan executions in the floating rate
marketFloating rate
Customerzone

high-end

mid tohighproprietary
fixed rate
“SuperFlat”

Channelfloating rate
as agency of net
banks (from Mar 2015)
Expanded to 3 products
New!
(from Aug2018)

(from Oct 2016)

proprietary floating
rate“ARUHI floating S”

Flat 35･･･

middleFixed rate

・corporate direct
sales
・directly managed
offices・Web・corporate directsales
・FC offices/directly
managed offices

・FC offices/directly
managed offices

proportion of floating rate products:
FYE Mar 2018： 10% → FYE Mar 2023: 33%
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

15

3”Anytime” &”anywhere” （omni-channel）

Plan to open 25 offices annually from this fiscal year for the coming
5 years to cover 90% of nation-wide realtors
franchise offices

Hokkaido
2 offices

directly
managed offices
corporate direct
sales

Hokuriku/
Koshietsu
5 offices

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

Jun end 2018：133

Tohoku7 offices

open 25 annuallyfocusing on
metropolitan
areas

Kanto
65 offices

Mar end 2023：250
or moreChugoku/
Tokai
Shikoku
Kinki
Kyushu/ 7 offices 18 offices 15 offices
Okinawa
14
officeswebchannel（ARUHI Direct)

completion of nationwide real channel
network

Realtor coverage in
Kanto, Tokai andKinki areas;
74% as of FYE Mar
2018,
85% by FYE Mar 2023
(target)mutualentries ofcustomers

strong expansion ofcustomer entries
through web channel
16Initiatives for the used property segment
Proceeding initiatives to focus on the used property market that is
growingchanges in home distribution volume


total amount of home distribution volume:flat
used home distribution volume: CAGR 2 to4%(thousand)

780

780
100

used

250

340
newly
built

Expected
increase by
thegovernment
policy thataims toexpandusedproperty
distribution
volume680

our initiatives


340

2015
2015年

current

FYE Mar 2023 (target)

competitors ARUHI

competitors ARUHI

44.1%

60%



speed
 speed is the key for all of sellers,intermediaries, and buyers

to open offices focusing on city areas
 major part of used homes are located incity areas

expansion of floating rate product line-up strong for both fixed and floating rate
products

530

housesandcondosfurther expand top market share for theused home segment of Flat 35

2030
2030年

Source: NIR

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

17

Growth drivers for mortgage business
Implement measures to utilize the DB, while maintaining andstrengthening ARUHI’s core competence(Bn yen)Platform Business Synergy(only mortgage loan business)
Operating revenues• Gather customers by utilizing the DB

More choices from realtors to win• Increase floating rate products• speed• Introduce customers to realtors• develop new loan productfollowing customer needs byutilizing the DB

Increase in realtor coverage• complete omni-channel

33.0

Gather potential needs• “ARUHI magazine”

20.4(from Mar 2016)• “ARUHI property
recommendation”(from Nov 2016)• “ARUHI quick prescreening”(from Dec 2017)2018年3月期
FYE
Mar 2018
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

2023年3月期
FYE
Mar 2023

2031年3月期
FYE
Mar 2031
18

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

19Hold various deep data on housing and living
Expand and deepen database on housing and living by running
multiple platform businesses

Future

Now

•

Home
search•Quick prescreening•

Mortgageloans•

LivingServiceDB onproperties

DB oncustomers

DB onhousingandlivingDB onliving andspending

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

20

Three new platform businesses
Develop three new platform businesses, utilizing the market position,
database, infrastructure built through mortgage loan business
pre-screening before home search” utilizing RPA and AI
 ”quickAIを使った自社開発したRE×Fin-Tech（不動産フィンテッ

1) platformbusiness forsupporting home
searches create a new用いて家の購入プロセスを変革し、家を買い
process to acquire a home by starting from knowingク）ツールをたい人に「スムーズで安心な家の購入体験」を提供
maximum loan amount
you can borrowする create a paperless, fully automated loan application process
customers who want to RE×Fin-Techacquire a home toポータルサイトを
realtors and Introduce
家探しワンストップサポート
monetize

経由して、家を買いたい人を不動産会社と自社に送客する

2) platformbusiness for life
solutions

3) platformbusiness for loan
operation
outsourcing

to provide free of charge consulting services as a “home doctor for
housing & home budget” and gather deep data by understanding
customers’ lifetime needs

to further develop and match parties who need and who provide products
and services at various life events

Release ARUHI’s loan operation infrastructure utilizing RPA and AI , andhandle loan operations for other financial institutions

to monetize mortgage loan operations that have been a cost center

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

21

Platform business for supporting home searches
Create a new paperless, fully automated loan application process which starts
from knowing maximum loan amount by utilizing “quick pre-screening before
home search”, AI and RPA【BEFORE】
want toacquire ahomegatherinformation onproperties

smart phone
smart speakerchooseproperty at
realtorseriously startconsidering
mortgageloans

re-choose
property
according tomaximum loan
amountborrow loan
throughcomplicatedprocedure

RPA

AI【AFTER】
want toacquire a
home

know
maximum
amount ofloan first by
quick prescreening

chooseaffordable
property by AI

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

choose best
mortgage loan
by AI

ask ARUHI to
introduce
realtorborrow loans
easily through
RPA

22

Platform business for life solutions
Start life event matching services
Life events and housing/living needs

marriagepurchasehome

Prepare for a new life,
acquire a home





raise
childrenelderlycare

after
retirement

Maintenance, renovation,
repurchase and relocation

mortgage loans and other financial
products“home doctor for housing & homebudget”“living service” (service started
from Jul 2015, currently around 70
partnerships)

Gather life-time data of housing
and home budget and continue
updating

ライフソリューションプラットフォーム事業
DB on
properties

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

DB oncustomers

DB onliving andspending

23

Platform business for loan operation outsourcing
To be outsourced on various operations based on infrastructure
built for Flat 35 business, and to make operations that have been acost center money making business

RPA operation
infrastructurebanks

mortgage banks

 more efficient
operations
 outsourcing needs

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

realtors

 more efficient
operations
 outsourcing need

 outsourcing
needs for
operations
related to loans24

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

25

Policies for dividend pay-out and M&As
To have dividend pay-out ratio of 30 to 40%, balancing investment
requirements necessary for growth.
Cash surplus considered to be used for growth, including M&As
and/or higher pay-out ratio

CAPEX(IT investments)

ROE
pay-out
ratio

FYE Mar 2018（actual）

FYE Mar 2019
throughFYE Mar 2022
（plan）¥0.5 Bn¥3.5 Bn

Investment for
growthincluding M&As

well managed
use of cash

and/or15％+
30 to 40％

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

higherpay-out

26

Content Our Starting Point：What ”ARUHI” Aims For
 Mid-term Plan Overview
 Businesses Mortgage Loan Business New Platform Businesses Policies for dividend pay-out and M&As

 Integration

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

27

New development of platform businesses
Develop and expand platforms built through mortgage loan businessto individual businesses
Mortgage Loan
Insurance Agency

Partnership
JHFA1

Bank Agency
SBI Sumishin
Net Bank
Sony BankAIGThe Shizuoka BankTokyo Marine &Nichido Fire Insurance

APLUS

Credit Agricole
Life Insurance
SBI Insurance

Rakuten BankBNP PARIBAS CARDIF

Sales/MarketingTechnology

IBJ

RPA Technologies

Nihon Unisys/
JIBUNHOUSE

Amazon Web Services

Life solution
living service

NEW

NEW

salesforce

Partnership witharound 70 companies

1. Japan Housing Finance Association

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

NEW

28

What we aim for
A multi-platform company that integrates customers, realtors,
financial institutions and companies
Access topotential
customers

Cost
reduction

Financial
institutions

outsourcing(RPA, AI)

RealtorsMore loans

Property
sales

Access topotential
customers

reformPurchase
consumergoods

CustomersMoreefficient
operations

B to C
companies

Home budget
consultation

Mortgageloans
Copyright© 2018 ARUHI Corporation. All Rights Reserved.

Product &service
expansionDatamining29

Disclaimer
Any securities of ARUHI Corporation have not been, and will not be registered under the United States Securities Act of
1933, as amended (the “Securities Act”). The securities may not be offered or sold in the United States absent registration or
an exemption from registration under the Securities Act. The Presentation Materials are based on various conditions,
economic, regulatory, market or otherwise, which were valid at the time of writing. ARUHI and its advisors or representatives
make no representations or warranty as to the accuracy, reliability or completeness of the Presentation Materials. Trends
going forward may potentially impact the information contained in the Presentation Materials. ARUHI and its advisors or
representatives have no obligation to update, revise or confirm the information contained herein. The information contained
herein is subject to change without notice. The changes to this information may be significant. Neither the Presentation
Materials nor any of its contents may be disclosed or used without the prior written consent of ARUHI. The Presentation
Materials may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995
(including estimates, forecasts, targets and plans). Any forward-looking statements contained herein are not management’s
guarantee of future earnings performance. Forward-looking statements include, but are not limited to, statements containing
words such as "aim", “projected”, “believes”, “continue”, “tests”, “estimated”, "predict", “measures”, “intends”, “potential”,“planned”, “expected”, “probable”, “risk”, “pursued”, “supposed”, “effort”, "target", "foresee", “scheduled", and similar
expressions. Also, forward-looking statements can sometimes be identified by discussion related to strategies, plans andintentions. The forward-looking statements in the Presentation Materials are based on management’s assumptions andbeliefs at the time of writing taking into account the information available at the time. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other important factors which may cause the actual results,
performance or achievements of the Company to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Information pertaining to a company other than
ARUHI or related to an interested party, or information prepared by either entity is based on generally available informationand other information quoted herein. ARUHI and its advisors have not independently verified the accuracy orappropriateness of the information herein and do not make any warranties with respect to this information. The financial
information used in the Presentation Material, unless otherwise expressly stated, was prepared in accordance with
International Financial Reporting Standards (IFRS) that were developed by the International Accounting Standards Board(IASB).

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

２５

Copyright© 2018 ARUHI Corporation. All Rights Reserved.

31