COMPANY RESEARCH AND ANALYSIS REPORT

Shinnihonseiyaku Co., Ltd.
4931
Tokyo Stock Exchange First Section

27-Jul.-2021
FISCO Ltd. Analyst

Tomokazu Murase

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. 1H FY9/21 financial results.................... ......................................................................................................

01

2. 1H FY9/21 net sales by channel.. ........... ......................................................................................................

01

3. The growth strategy............................... ......................................................................................................

01■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Company overview and history.............. ......................................................................................................

02

2. Business overview................................. ......................................................................................................

03

3. Strengths.....................................................................................................................................................

05

4. The market environment..............................................................................................................................

06■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 07
1. 1H FY9/21 financial results.................... ......................................................................................................

07

2. Operating profit increase-decrease factors. .................................................................................................

08

3. Financial condition................................. ......................................................................................................

10■The impact of the COVID-19 pandemic------------------------------------------------------------------------------------------------ 11■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 12
1. FY9/21 financial results forecasts.......... ......................................................................................................

12

2. FY9/21 net sales plan by channel................................................................................................................

13■The growth strategy------------------------------------------------------------------------------------------------------------------------------------------------ 14■Measures for ESG------------------------------------------------------------------------------------------------------------------------------------------------------ 18■Measures for SDGs-------------------------------------------------------------------------------------------------------------------------------------------------- 18■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 19

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/█ Summary
PERFECT ONE Wrinkle Stretch Gel performed well. Progress madein expanding brand awareness with the millennial generation
Shinnihonseiyaku Co., Ltd. <4931> (hereinafter, “the Company”) conducts planning and sales of cosmetics, healthfoods, and pharmaceuticals. It handles simple skincare merchandise under the “PERFECT ONE” brand name,including the mainstay Perfect One All-in-One Gel series. It has three sales channels--the main channel of mail order,
direct store sales and wholesale, and overseas sales. The Company promotes a vision of “Creating Healthy and
Enriched Lives for People around the World,” and conducts business activities as a Creator of Lifestyles that Foster
Beauty and Good Health through Database Marketing. It specializes in the planning, development, marketing, andsales of merchandise, and is a fabless manufacturer that externally outsources production.
1. 1H FY9/21 financial results
Results in 1H FY9/21 (October 2020 to March 2021) were ¥16,575mn in net sales (down 1.5% year-on-year (YoY)),¥1,398mn in operating profit (up 27.3%), ¥1,430mn in ordinary profit (up 30.0%), and ¥965mn in profit (up 40.8%).
Net sales of cosmetics in mainstay mail order sales business exceeded the same period of the previous fiscal year
by up-selling (raising the average purchase price) existing customers of PERFECT ONE Wrinkle Stretch Gel andincreases in purchase frequency. Customer acquisition went well thanks to heightened brand awareness in themillennial generation (30s and under) driven by broadcasts of brand CMs and conducting sales promotions in conjunction with social media. In earnings, the Company kept operating expenses below the planned amount throughreductions in order fulfillment costs (FF costs) and call center costs aided by advances in efficiency improvement
measures. These savings put profits well above the previous fiscal year at all levels.
2. 1H FY9/21 net sales by channel
Overseas and domestic EC net sales increased at a double-digit pace to ¥1,946mn (up 20.7% YoY) through theacquisition of new customers in Japan and healthy overseas business led by China. Direct store and wholesale net
sales slipped to ¥855mn (down 22.6%) due to the spread of COVID-19 infections. Nevertheless, brand awareness
improved with the millennial generation thanks to the development of new customer contact points, such as digitalmarketing via social media and test initiatives at drugstores. Overseas net sales totaled ¥433mn (up 46.1%). The
Company continued efforts to boost awareness and expand sales through promotions utilizing social media andpopular influencers. Net sales in China grew 3.9 times YoY in 2Q (January-March 2021).
3. The growth strategy
For medium-term performance targets, the Company is aiming to achieve net sales of ¥40bn or more and an
ordinary profit rate of 10% or more in FY9/23. The Company has positioned FY9/21 as a period to acquire a wide
range of customers and achieve brand growth, and is advancing its growth strategy. The Company has set forth
further growth of the Perfect One brand, acceleration of EC and digital expansion, brand development and growth
for nurturing global brands, and development of Smart Health Care Business as its growth strategies. In addition, theCompany has created a growth strategy roadmap, separated into targets including the senior generation (60s andabove), the middle age generation (40-59), the millennial generation (30s and under) and Overseas. Furthermore, inboth the cosmetics and healthcare categories, the Company has formulated clear medium-term strategies for eachtarget. It also added development of new businesses and broadening business scope through M&A and development
and rollout of new brands for younger people targeted at the millennial generation. to its growth strategies.

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01 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Summary

Key Points
Holds a top share in the all-in-one skincare market
Posting steady sales of PERFECT ONE Wrinkle Stretch Gel• Achieving robust acquisition of new customers through EC• Added ramp-up of new brands and development of new businesses and broadening business scope throughM&A to growth strategies••

Results trends
Net sales (left)(¥mn)

Operating profit (right)

3,329

40,000

(¥mn)

3,500
3,600

2,864

35,000

3,000

2,493
30,000

2,151

2,400

25,00020,0001,800

28,372

31,21033,57033,72835,0001,200

15,000600

10,0000
FY9/17

FY9/18FY9/19FY9/20FY9/21 E

Source: Prepared by FISCO from the financial results█ Company profile
Expanding health and beauty business mainly with new lifestyle
proposals, holds a top share in the all-in-one skincare market
1. Company overview and history
The Company conducts health and beauty business mainly with new lifestyle proposals and implements planningand sales of cosmetics, health foods, and pharmaceuticals. Cosmetics business handles All-in-One Gel series andother simple skincare products through the Perfect One brand and occupies a top share in the all-in-one skincare
market. It has three sales channels: the main channel of mail order, direct stores and wholesales, and overseas. It
promotes a vision of “Creating Healthy and Enriched Lives for People around the World,” and it conducts businessactivities as a Creator of Lifestyles that Foster Beauty and Good Health through Database Marketing. It specializes
in the planning, development, marketing, and sales of merchandise and is a fabless manufacturer that externallyoutsources production.

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02 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Company profile

Shinnihonliving Co., Ltd. (currently the Company) was established in 1992 as a company planning and selling daily
commodities. In 1994, it started a mail order business for diet supplements and health teas and expanded its
business scope to cosmetics and pharmaceuticals. For the sales channels, it started from local free papers and then
expanded to Kyushu and nationwide. It began a television mail order business from 2001 and opened direct sales
stores in 2010. It started sales in Taiwan in December 2016, and after that, it also developed its business in Hong
Kong, China, Thailand, and Singapore, and further launched a business in Vietnam on June 1, 2020.
The Company listed its stock on the TSE Mothers market in June 2019 and switched to the TSE First Section market(TSE-1) in December 2020.

A company that creates lifestyles of beauty and good health bycollecting the latest technical information and ingredient informationand developing highly effective and functional merchandise
2. Business overview
The Company handles cosmetics, health foods, and pharmaceuticals that relate directly to health and beauty thatare essential in lifestyles. In cosmetics, which provide more than 90% of sales, the Perfect One All-in-One Gel series
is the Company’s mainstay merchandise, and it has ranked No.1 for domestic sales in the all-in-one skincare market
for five consecutive years (FUJI KEIZAI CO., LTD., Cosmetics Marketing Handbook 2017, 2018, 2019, 2020, and2021 (Moisturizer and All-in-one Care Products Division/ 2016, 2017, 2018, 2019, and 2020 manufacturer andbrand share results)). Through cooperation between market research, call centers, and stores, and based on the
database marketing it has cultivated up to now, the Company collects the latest technical information and ingredient
information to develop merchandise that is highly effective and functional. In customer data, the Company has
accumulated data on 5.37mn cases up to now mainly for women in the middle age generation and older. It is also
simultaneously implementing improvements aimed at facilitating proposals that address expectations more effectively
by measuring the effect on over 1.5mn customers annually.
The main products of the Perfect One All-in-One Gel series are as follows. Moisture Gel, which is a blend of 50 typesof moisturizing ingredient including Compounding Collagen EX, which combines 7 types of collagen; Whitening
Gel, which is a blend of 55 types of moisturizing ingredient as well as an ingredient effective for skin whitening that
inhibits the production of melanin; and Super Moisture Gel, which has a high moisturizing effect through blending 60
types of moisturizing ingredient, including platinum collagen EX. Moreover, Lifting Gel is a formulation of protective
collagen, which is an original ingredient developed independently by the Company, and is the product formulatedwith the highest concentration of collagen within this series. Aside from these, it provides merchandise such as
Cleansing Soap, which is formulated with collagen and has five functions, including face cleansing, makeup removal,
and pore care, and the all-in-one foundation CC Cream, which covers wrinkles due to light, containing 40 typesof moisturizing ingredient and retaining the most moisture in makeup. Recently in September 2020, the Company
launched PERFECT ONE Wrinkle Stretch Gel, a new product in the All-in-One Gel series containing vitamin PP, forthe first time in Japan. This is a medicinal, all-in-one gel that can simultaneously be used for whitening beauty careand improving epidermal wrinkles.

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03 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Company profile

For health foods, the Company handles merchandise including foods labelled with functions and dietary supplement
foods. The following are the main health food merchandise: Green Vegetable Juice Salad Plus, which is a green
vegetable juice containing 20 types of domestically produced ingredients, including indigo plant, kinji-sou plant,
and coastal hog fennel; Loco Attack EX, which is a food labelled with functions containing proteoglycan derived
from salmon cartilage and unmodified II type collagen, and serves as a supplement to improve the movement ofknees on a daily basis; Kioku-leaf, which is also a food labelled with functions and a supplement formulated withginkgo leaf-derived flavonoid glycoside and ginkgo leaf-derived terpene lactones to maintain the memory abilitiesof the middle-aged and the elderly, such as supporting forgetfulness due to aging. In February 2021, the Company
launched sales of UV Pro, a food labelled with functions that includes astaxanthin, which protects skin moisture withfull-body UV care internally and protects skin from ultraviolet stimulation. In addition, in January 2021, the Smart
Health Care Business launched sales of BODY AURA, a product for which evidence is valued that supports the
body’s self-defense capability necessary for maintaining health in the long term.
In pharmaceuticals, the Company researches combinations of Japanese and Chinese plants and materials withthe aims of realizing effective prescriptions, and handles merchandise launched to improve a variety of diseases
and symptoms, including rough skin, chills, joint and back pain, and menopause. The main merchandise includes
Yokuininekisu Tablets SH, an herbal medicine that maintains the condition of skin internally and improves warts
and rough skin, as well as Cysty White Plus +, which has the effect of ameliorating spots, freckles, and pigmentarydeposits caused by sunburn and rashes.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Company profile

Summary of the Company’s main merchandise[Perfect One series]
PERFECT ONE
Moisture Gel

The All-in-One Gel series responds to aging skin issues, such as skin slackening and small wrinkles. In addition to theCompounding Collagen EX, which combines 7 types of collagen, it is formulated with 50 moisturizing ingredients, including
moisture magnet that supplements and maintains moisture.

PERFECT ONE
Whitening Gel

Formulated using arbutin, a skin whitening effective ingredient that suppresses the formation of melanin and which approaches
the problem from the original blemishes, it also blends tranexamic acid to prevent dry skin. The All-in-One Gel series has skinwhitening and moisturizing effects and takes a multi-faceted approach to skin damage caused by ultraviolet rays.

PERFECT ONE
Super Moisture Gel

It contains 60 types of moisturizing ingredient, including Compounding Collagen EX, moisture magnet, and also platinum
collagen EX and moisture coat collagen. The All-in-One Gel series maintains concentrations of moisture for a long time and ishighly moisturizing.

PERFECT ONE
Lifting Gel

Even in the All-in-One Gel series, it is formulated with the highest concentration of collagen. It is a new formulation in the All-inOne Gel series, being the first in the world to contain protect collagen, an ingredient independently developed by the Company,
and it can realize fully fledged aging care through blending 72 types of moisturizing ingredients, including stretch essence andmoisture magnet.

PERFECT ONE
Wrinkle Stretch Gel

A medicinal, all-in-one gel containing the active ingredient vitamin PP. It has been confirmed that vitamin PP is effective in
improving epidermis wrinkles, and moreover, it suppresses the production of melanin that causes skin blemishes, and it iseffective in whitening beauty care. This single product plays seven roles, as in addition to being used as lotion, milky lotion,
cream, serum, a facial mask, and a foundation primer, it can also be used as neck cream.

PERFECT ONE
Cleansing Soap

A cleansing soap formulated with collagen and by combining 50 types of moisturizing ingredient. Its makeup sensor ingredienthas the effect of absorbing makeup and pore sebum stains.

PERFECT ONE CC
CreamAn all-in-one foundation that combines various functions, including a makeup base, foundation, color control, and sunscreen.
It is formulated with color control powder, which controls light to cover skin problems such as wrinkles, and stretch polymer,
which moves in accordance with the user’s facial expression. Moreover, it is formulated by combining 40 types of moisturizing
ingredient, including collagen veil and hyaluronic acid.

[Health foods]
Rise and shine!
Green Vegetable
Juice Salad Plus

A green vegetable juice formulated by blending 20 types of domestically produced ingredients, including indigo plant, kinji-souplant, and coastal hog fennel, to support a nutritional balance. It is also formulated by blending vegetable nano-type lactobacilli,
fermented burdock, and calcium.

Loco Attack EX

A food labelled with functions containing proteoglycan derived from salmon cartilage and unmodified II type collagen. It is a
supplement to improve the day-to-day movement of knees and feelings of discomfort.

Kioku-leaf

A food labelled with functions formulated with ginkgo leaf-derived flavonoid glycoside and ginkgo leaf-derived terpene lactones
to maintain the memory abilities of the middle-aged and elderly. It is a supplement that supports forgetfulness due to aging.

UVPro

A food with functional claims that includes astaxanthin, which protects skin moisture with full-body UV care internally, andprotects skin from ultraviolet stimulation.

BODY AURA

A supplement for the new normal era containing L. rhamnosus lactic acid bacteria combined with fermented wheat germ
extract. This is a supplement that supports people’s “self-protection power,” which is necessary for managing health in the
future.

[Pharmaceuticals]
Yokuininekisu
Tablets SH

A category-three pharmaceutical. Provided as easy-to-take tablets with ingredients extracted from coix seed from pearl barley,
which is used as a herbal ingredient that is effective for warts and dry skin.

Cysty White Plus +A category-three pharmaceutical. Effective for ameliorating skin pigmentation issues like spots and freckles, and due tosunburn and rashes. It is formulated by blending L-cysteine and various types of vitamins, and it acts on spots and freckles
from three approaches, of “preventing, reducing, and helping to eliminate” spots.

Source: prepared by FISCO from the Company’s homepage

Holds an overwhelmingly high market share for senior generation.
Ranked No.1 for domestic sales in the all-in-one skincare market forfive consecutive years
3. Strengths
The Company’s strengths include that it owns well-established brands in the all-in-one skincare market. In theapproximately 15 years since the Company launched sales in 2006, the mainstay All-in-One Gel series ranked
No1. for domestic sales in the all-in-one skincare market for five consecutive years, and the cumulative number of
products sold exceeds 65 million items.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Company profile

In merchandise planning, the Company prioritizes the “actual voices of customers,” who call the call center, such as
their opinions and requests, and launches merchandise that is tailored to meet customer needs based on databasemarketing. The “actual voices of customers” are reflected concretely in services and products, such as in launchesof new merchandise and information disseminated through the membership magazine. The Company also increases
customer engagement by providing discounts and points and conducting limited-offer campaigns, and is developing
a base of subscription purchase-type customers. The high rate of continuous purchases can be said to be one of
the Company’s features and strengths.
FISCO thinks strong barriers exist for entry of major cosmetics manufacturers into the all-in-one skincare market.
Since major cosmetics manufacturers supply cosmetics in various categories, entry into the all-in-one skincare
market runs the risk of undermining the value of their existing products. Furthermore, as for the Company’s competitors, Premier Anti-Aging Co., Ltd.<4934>, which was recently listed on the TSE Mothers market, is developing
merchandise including the cleansing balm and PREMIER WHITE in the DUO and CANADEL brand series. However,the customer group it targets are young women, so it does not appear that it will take customers from the Company,
which holds an overwhelmingly high market share among the senior generation. Nevertheless, one of the Company’s
growth strategies is reinforcement of brand strategy with the middle-aged and millennial generations. The Company
has enlisted the help of a male celebrity who is popular with a wide range of generations in its brand promotion
efforts and is airing commercials nationwide. Positive market reaction to the commercials has raised expectations
for acquiring new customers in the middle-aged and millennial generations while retaining an overwhelming sharein the senior generation.
For merchandise development, the Company collects the latest technical information and ingredient information while
conducting research, including joint research with the Tokyo University of Agriculture and Technology, to develop
highly effective and functional merchandise. It is said that collagen accounts for about 70% of skin, which is why
the Company considers it to be particularly important for skin care based on age. Collagen is notable for decreasing
by amount and changing in quality with age. To address this change, it developed Compounding Collagen EX (amoisturizing ingredient) that uniquely combines seven types of collagen with different effects and functions. In July
2020, it acquired a patent for a new functional collagen raw material manufacturing method and succeeded indeveloping the world’s first original raw material, VC Collagen. In this raw material, the collagen has a moisturizing
effect, while the vitamin C has an antioxidant effect. Additionally, it has been confirmed to have a collage production
stimulating effect that is nearly five times that of general collagen raw materials.
4. The market environment
The beauty industry has been greatly affected by the decrease in opportunities to go outside due to COVID-19.
Consumers’ cosmetic needs have diminished due to the impacts of the self-restraint on outings and from wearing
masks, while this market is also being affected by the rapid decrease in the number of overseas visitors to Japan.
It is thought that economic activities may normalize due to the provision of vaccines to prevent COVID-19 infection.
Nevertheless, masks will remain an essential item in the new normal (a new lifestyle) for the time being. In addition,
it seems that the movement to promote teleworking is widening, and it is thought that the recovery of the frequencyof purchases of makeup items will be only gradual as working from home becomes normalized. Conversely, an
increasing number of consumers are worried about makeup coming off when wearing a mask, mask burn, andrough skin, so demand for skincare products is rising. Regarding changes in consumer attitudes and behavior fromthe pandemic, it is widely thought that mask wearing and other anti-infection measures and lifestyles are unlikely toreturn entirely to the previous state, even with anticipated normalization of economic activities due to progress invaccinations. FISCO sees large room for growth in the skincare market.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.

27-Jul.-2021

4931 Tokyo Stock Exchange First Section

https://corporate.shinnihonseiyaku.co.jp/en/ir/█ Results trends
Net sales beat guidance in 1H due to a rise in cosmetics sales driven
by mail order selling. This trend, along with progress in efficiency
enhancement, supported a double-digit YoY profit gain
1. 1H FY9/21 financial results
For results in 1H FY9/21 (October 2020 to March 2021), the Company reported ¥16,575mn in net sales (down 1.5%
YoY), ¥1,398mn in operating profit (up 27.3%), ¥1,430mn in ordinary profit (up 30.0%), and ¥965mn in profit (up40.8%), resulting in a decrease in sales and increase in profit. The impact of temporary curtailment of advertising
investment in 2H in the previous period and decline in store traffic at direct stores and dealer locations was
significant, and continued into 2Q, which resulted in a sales decline for direct stores and wholesales. Nevertheless,1H net sales ended up beating guidance. Cosmetics sales in mainstay mail order sales business exceeded theprevious fiscal year through robust sales of PERFECT ONE Wrinkle Stretch Gel with upselling (lifting the averagepurchase price) for existing customers and increases in purchase frequency. Customer acquisition progressed thanks
to heightened brand awareness in the millennial generation driven by broadcasting brand CMs that featured a malecelebrity as a character and conducting sales promotions in conjunction with social media as brand strategies toacquire new customer bases. Earnings were well above the previous fiscal year at all levels. The Company kept
operation costs below the planned amount through reductions in FF costs and call center costs aided by advancesin efficiency improvement measures.
1H FY9/21 financial results(¥mn)
1H FY9/21

YoY

1H FY9/20
Results

Plan

Results

Amount ofchangeRate of change

Changesversus the plan

16,834

16,37916,575

-258

-1.5%

195

Cosmetics

15,49815,312

15,503

4

0.0%

190

Healthcare

1,335

1066

1,072

-262

-19.7%

5

Operating profit

1,098

695

1,398

300

27.3%

702

Ordinary profit

1,100

669

1,430

330

30.0%

761

6.5%

4.1%

8.6%

2.1pt

-

4.5pt

685

415

965

279

40.8%

550

Net sales

Ordinary profit rate
ProfitSource: Prepared by FISCO from the Company’s financial results and supplementary briefing material

At the channel level, mail order net sales dropped to ¥15,286mn (down 0.9% YoY), although this figure beatguidance. Net sales were lower than in the previous fiscal year on an overall basis because of sluggishness inhealthcare products due to the impact of strategic curtailment of advertising investments up until now. Main drivers
in beating the plan target, meanwhile, were successful sales promotion with a campaign for presents promotedby the male celebrity used in commercials and initiatives toward up-selling of PERFECT ONE Wrinkle Stretch Gel
to fixed-term purchase customers in cosmetics business. Net sales of cosmetics in the mail order sales businessexceeded the same period of the previous fiscal year supported in part by up-selling.

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07 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.

27-Jul.-2021

4931 Tokyo Stock Exchange First Section

https://corporate.shinnihonseiyaku.co.jp/en/ir/

Results trends

Overseas and domestic EC business achieved double-digit growth at ¥1,946mn in net sales (up 20.7% YoY) thanks
to new customer acquisition in Japan and steady overseas business led by China. Net sales for direct stores andwholesale business came to ¥855mn (down 22.6%) amid ongoing difficult business conditions due to COVID-19.
At a pop-up event held for a limited period in Harajuku in 1Q, customer traffic and net sales during the period
significantly exceeded expectations.
Overseas sales business recorded ¥433mn in net sales (up 46.1%). The Company enlisted key opinion leaders(KOL)*, which are becoming mainstream in China and other Asian countries, to improve awareness, thereby expanding sales. Additionally, sales have steadily been climbing in the one year since the launch of a flagship store on
Tmall, China’s largest retail online shopping mall operated by Alibaba Group. Through these initiatives, the Company
expanded net sales in China by 3.9 times YoY in 1H. In Thailand, the Company broadened sales channels to EC
malls used very frequently by target customers in the 20s-40s age group (top-tier Southeast Asian EC sites Lazada
and Shopee and Thailand’s top-level cosmetic EC site Konvy).
*	KOL refers to an influencer with an area of expertise.

1H FY9/21 net sales by channel(¥mn)
1H FY9/21

YoY

1H FY9/20
Results

Plan

Results

Amount ofchangeMail order

15,431

14,694

15,286

-145

-0.9%

592

Direct store sales/wholesale

1,105

1,229

855

-250

-22.6%

-374

296

455

433

136

46.1%

-22

Overseas sales

Rate of change

Changesversus the plan

Source: Prepared by FISCO from the Company’s supplementary briefing material

2. Operating profit increase-decrease factors
In 1H FY9/21 operating profit, mail order net sales were better than expected due to factors such as the effects
of up-selling for PERFECT ONE Wrinkle Stretch Gel and increased buying frequency. In contrast to this, net sales
decreased (down ¥210mn) mainly due to decreases in direct store and wholesale as well as healthcare, resulting
in a lower gross margin (down ¥40mn). As for advertising expenses, marketing investments were on par with theprevious fiscal year (up ¥40mn). Other factors included sales promotion expenses (down ¥70mn) and improved
efficiency in FF costs (up ¥140mn) due to reductions in shipping delivery costs and declines in agent fees throughencouragement of change in the payment method. Cutbacks in call center costs and other costs in SG&A expenses
contributed to steep increases in profit (up ¥440mn).

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08 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Results trends

At FISCO we think that improving the efficiency of FF costs is a field that the Company should focus on as one
growth factor, while continuing to grow sales of cosmetics. Since April 2019, it has implemented measures to charge
shipping fees. As a result, the shipping costs that it has had to bear up to now are continuing to decrease. This has
not resulted in restrained buying by consumers, but instead is ameliorating the increase in shipping fees they haveto bear as a result of the push for “bulk shipping” in which a two months’ supply of products is shipped at once. In
addition, for the switch of payment method, the switch from cash on delivery to post-payments on credit is reducing
the Company’s payment fees. However, we at FISCO believe that customers who pay through cash on delivery still
make up a high percentage of customers, and that there is significant room for the enhancement of efficiency whenit comes to FF costs. In particular, replacement is likely to proceed as a contactless payment method driven by the
COVID-19 pandemic. For call center costs as well, there are many excellent customers, such as repeat purchasers,
and specialist structure to deal with customers is necessary to reflect customers’ opinions in merchandise and theCompany itself must allocate a certain number of personnel to it. On the other hand, outsourcing approximately
60% of call center work to external companies enables changing the allocation of communicators, based on factors
such as ordering conditions, which enables cost controls to be carried out.
1H FY9/21 operating profit increase-decrease factors

Source: The Company’s supplementary briefing material

FY9/21 financial results summary supplement(¥mn)
1H FY9/20
Results

1H FY9/21
Plan

YoY

Results

Amount ofchangeRate of change

Changesversus the plan

1,612

2,004

1,946

334

20.7%

-57

5,317

5,509

5,270

-46

-0.9%

-239

FF costs

2,145

1,958

1,961

-184

-8.6%

2

Call center costs

1,512

1,495

1,268

-243

-16.1%-227

Overseas and domestic EC net sales
Marketing investment
Advertising expenses
Operations costs

Source: Prepared by FISCO from the Company’s supplementary briefing material

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09 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Results trends

3. Financial condition
At the end of 1H FY9/21, total assets were ¥20,277mn, up ¥321mn on the end of the previous fiscal year. Thiswas mainly due to a ¥354mn increase in cash and deposits, a ¥199mn increase in merchandise and a ¥181mn
decrease in non-current assets. Liabilities totaled ¥4,933mn, a decrease of ¥755mn from the end of the previous
fiscal year. This mainly reflected a ¥307mn decline in accounts payable-other, in addition to a ¥154mn drop in
accounts payable-trade, and a ¥106mn decline in income taxes payable. Net assets came to ¥15,344mn, an
increase of ¥1,077mn from the end of the previous fiscal year. The main factors were an increase of ¥664mn due tothe issuance of new shares, posting of profit of ¥965mn, and a decrease of ¥642mn due to payment of dividends.
The equity ratio was 75.0%, rising 3.8 percentage points (pp) from 71.2% at the end of FY9/20.
The Company conducted issuance of new shares by way of third-party allotment in December 2020. The Company
will allocate the estimated net proceeds from the capital increase of ¥649mn to new healthcare businesses. Up until
now, the Company’s main business was cosmetics including skincare products. However, with the global healthboom and rising interest in personal healthcare in recent years, the Company plans to strengthen and expand thehealthcare business as its second pillar of its business.
Balance sheet(¥mn)
End of
FY9/19End of
FY9/20End of
1H FY9/21

Amount ofchange14,693

16,211

16,715503

Cash and deposits

10,576

12,271

12,626354

Accounts receivable-trade

2,913

2,607

2,516

-91

Inventory assets

1,063

1,193

1,371

178
-181

Current assets

Non-current assets

3,882

3,744

3,562

Total assets

18,575

19,956

20,277

321

Liabilities

5,817

5,688

4,933

-755

Accounts payable-trade

416

509

355

-154

Interest-bearing debt

1,109

936

849

-86

12,75814,267

15,344

1,077

Net assets
Treasury shares
Total liabilities and net assets

-

-299

-273

26

18,575

19,956

20,277321

Source: Prepared by FISCO from the Company’s supplementary briefing material

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10 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Results trends

Trends in net cash and equity ratio
Net cash (left)(¥mn)
16,00014,00068.7%

Equity ratio (right)
71.2%

80.0%
75.0%

70.0%

12,00060.0%

10,000

50.0%

8,000

40.0%

6,000
4,000

11,335

11,777

9,467

30.0%
20.0%

2,000

10.0%

0

0.0%
FY9/19FY9/201H FY9/21

Source: Prepared by FISCO from the Company’s supplementary briefing material█ The impact of the COVID-19 pandemic
Continued steady demand for skincare products and expansion ofsales opportunities in new smart healthcare products
Conditions remain difficult as the renewed spread of COVID-19 infections has heavily affected economic activities andpersonal consumption. Economic prospects are still unclear, despite an outlook for moderate recovery of economic
activity due to progress in vaccinations and measures to prevent the spread of infection.
In terms of the impact of the COVID-19 pandemic on the Company’s overall business, in FY9/20 there were stableneeds for skincare products (minimal impact from habitual mask wearing and reduced opportunities to go out).
Meanwhile, although sales of cosmetics were down compared to FY9/19, the direct impact from the COVID-19
pandemic was limited to the direct store/wholesale sales and the overseas sales channel. In terms of the expected
impact on the Company’s overall business in FY9/21, it expects demand for skincare products to stably continue,and demand for skincare products that alleviate concerns such as rough skin caused by wearing masks to expand.
Additionally, the Company thinks that there will be expanded needs for healthcare products driven by consumers’
enhanced health awareness based on recognition of obesity due to factors like lack of exercise caused by the
COVID-19 pandemic and healthy life span, and cites this as an opportunity for sales expansion.

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11 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

The impact of the COVID-19 pandemic

Looking at each channel, the Company expects continued expansion of mail order sales and EC needs and ongoing
downturn in incoming call volume for inquiries about delivery and products accompanying the increase in time spentat home. The Company has also mentioned more opportunities to propose new products due to the increase intime to handle calls as well as changes in the advertising investment environment. In direct store and wholesale
business, the Company anticipates that store customer traffic volume will remain at the same level it has been
since spring 2020 and anticipates the possibility of shorter business hours from a state of emergency declaration.
In overseas sales business, it sees a possibility of temporary impact from regional lockdowns and other situations
but no particular impact in terms of things like export delays or halted logistics. Meanwhile, the Company cited
expansion of sales opportunities in live commerce and other EC.
Additionally, in an environment where industry peers are being affected by the COVID-19 pandemic and strengthening discounted price strategy with the aim of clearing inventories, the Company is promoting brand strategy thattargets the 20s-40s age groups and has been steadily raising awareness in overseas sales business. For this reason,
FISCO thinks the Company is fully capable of realizing earnings growth in the future without resorting to discounts.

█ Outlook
The FY9/21 results forecast has been left unchanged from the initial
forecast. In addition to additional growth of the PERFECT ONE
brand, growth is expected in the Smart Health Care Business, Whichis the Company is aiming to grow into its second business pillar
1. FY9/21 financial results forecasts
In the FY9/21 financial results forecast, the Company assumes ¥35,000mn in net sales (up 3.8% YoY), ¥3,500mn
in operating profit (up 5.1%), ¥3,460mn in ordinary profit (up 5.4%), and ¥2,300mn in profit (up 8.4%). Despite
outpacing the full-year forecast in 1H, the Company retained its initial targets. Broken down by product category,in cosmetics, it projects ¥32,539mn in net sales (up 4.6% YoY). It foresees sales growth driven by new cosmetics
product sales promotion measures in the mail order sales channel and sales expansion for PERFECT ONE Wrinkle
Stretch Gel. In healthcare, it projects ¥2,460mn in net sales (down 6.4%). The Company hopes to strengthen sales
through expansion of advertising investments in foods labelled with functions and cross-selling and also work on
developing Smart Health Care Business.
FY9/21 financial results forecasts(¥mn)
FY9/21

FY9/19Results

FY9/20Results

1H Results

FY Forecasts

33,57033,728

16,57535,000Cosmetics

30,57531,09815,50332,539

4.6%

Healthcare

2,994

2,630

1,072

2,460

-6.4%

Operating profit

2,864

3,329

1,398

3,500

5.1%

Ordinary profit

2,822

3,283

1,430

3,460

5.4%

8.4%

9.7%

8.6%

9.9%

-

1,824

2,122

965

2,300

8.4%

Net sales

Ordinary profit rate
ProfitYoY Change
3.8%

Source: Prepared by FISCO from the Company’s supplementary briefing material

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12 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Outlook

2. FY9/21 net sales plan by channel
No changes have been made to the assumptions for FY9/21 full-year forecasts based on 1H FY9/21 results. In net
sales by channel, mail order sales of the Perfect One All-in-One Gel series, which is the Company’s mainstay product,
are expected to increase 1.1% YoY to ¥31,213mn. Direct store and wholesale sales are forecast to increase 32.2%
to ¥2,836mn. Overseas sales are forecast to rise 34.3% to ¥950mn. Overseas and domestic EC sales, which are
driving the sales, are forecast to increase 30.0% to ¥4,477mn.
The Company intends to bolster sales in healthy channels aimed at realizing full-year forecast targets. It plans tostrengthen advertising investments for PERFECT ONE Wrinkle Strength Gel and promote additional recruitment of
new customers in the mail order sales channel. For that reason, it is planning an advertising expenses budget of¥10,846mn (up 7.6% YoY), including curtailed investments in FY9/20. The Company aims to continue improvements
in cost efficiency, including reduction of FF costs by 2.0% to ¥4,109mn in operating expenses. For call center costs,
meanwhile, it forecasts ¥3,070mn (up 7.5%) due to rebound from strategic curtailment in FY9/20 and reinforcementof marketing investments. Despite smooth progress in improving the efficiency of operating expenses, the Company
retained the conservative initial forecast, which FISCO thinks is a cautious stance.
FY9/21 results forecasts(¥mn)
FY9/21

FY9/19Results

FY9/20Results

1H Results

FY Forecasts

Mail order

30,80430,875

15,286

31,213

1.1%

Direct store sales/wholesale

2,151

2,145

855

2,836

32.2%

614

707

433

950

34.3%

FY9/19Results

FY9/20Results

1H Results

2,816

3,444

1,946

4,477

30.0%

10,245

10,0795,270

10,846

7.6%

FF costs

4,575

4,194

1,961

4,109

-2.0%

Call center costs

3,082

2,857

1,268

3,070

7.5%

Overseas sales

Overseas and domestic EC net sales

YoY Change

FY9/21FY Forecasts

YoY Change

Marketing investment
Advertising expenses
Operations costs

Source: Prepared by FISCO from the Company’s supplementary briefing material

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13 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.

27-Jul.-2021

4931 Tokyo Stock Exchange First Section

https://corporate.shinnihonseiyaku.co.jp/en/ir/█ The growth strategy
Outlined clear medium-term strategies for each generation target,
added development of new businesses and broadening businessscope through M&A
For medium-term performance targets, the Company is aiming to achieve net sales of ¥40bn or more and ordinary
profit rate of 10% or more in FY9/23. It has positioned FY9/21 as a period to acquire a wide range of customers
and to achieve brand growth, and is advancing its growth strategy. For growth strategies, the Company has set
forth further growth of the Perfect One brand, acceleration of EC and digital expansion, achieving brand growth
for nurturing global brands, and development of Smart Health Care Business. The Company has also created a
growth strategy roadmap and has formulated clear medium-target strategies for each of the four targets of senior
generation, middle age generation, millennial generation, and overseas as targets in the cosmetics and healthcare
category. From 2Q FY9/21, the Company added development of new businesses and broadening business scopethrough M&A for all categories. It also added development and rollout of new brands for younger people targetedat the millennial generation.

Medium-term performance targets
Net sales (left)(¥mn)

Ordinary profit rate (right)

60,000

10.0% or more
9.7%

50,00040,000

10.0%

8.4%
33,57012.0%

9.9%
40,000 or more

33,7288.0%

35,00030,000

6.0%

20,000

4.0%

10,000

2.0%

0

0.0%
FY9/19FY9/20FY9/21targets

FY9/22targets

FY9/23targets

Source: Prepared by FISCO from the Company’s supplementary briefing material

For the senior generation in the cosmetics category, the Company aims to increase lifetime value (LTV)* and acquire
new customers and cites expansion of PERFECT ONE Wrinkle Stretch Gel sales and reinforcement of databasemarketing as strategies. For the millennial generation, it continues to work on rollout of a new brand strategy using
a popular celebrity and promotion of digital marketing using social media in recruitment of customers mainly in the
20s-30s age groups. From 2Q FY9/21, it also intends to ramp up a new brand for younger people. For middle-aged
and millennial generations, the Company plans to accelerate EC and digital expansion. In overseas business, it
advocates brand growth toward becoming a global brand. It is promoting further growth in China and intends topromote brand growth in Asia and ASEAN countries. Furthermore, the Company has started test marketing for Perfect
One brand sales in North America and is steadily advancing initiatives toward growth into a global standard brand.
*	LTV refers to customer lifetime value.

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14 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

The growth strategy

In the healthcare category, the Company intends to pursue brand value and cultivate Smart Health Care Businessthrough acquisition of a new customer base for middle-aged and millennial generations and acquire new customers
mainly in foods labelled with functions and enhanced cross-selling for senior healthcare business.
Growth strategy roadmap

Source: Prepared by FISCO from the Company’s supplementary briefing material

Maximizes customer database value and emphasizes up-sellingand cross-selling for the senior generation. Plans to release a newskincare brand as soon as this fall in recruitment of middle-aged
and millennial generations(1) Further growth of the Perfect One brandTo realize the medium-term performance targets at an early stage, the foundation of Company’s strategy is toaim for the further growth of the Perfect One brand to develop it to be a brand that is selected continuously overa long period. With the expansion of the anti-aging skincare market, in September 2020 the Company launched
PERFECT ONE Wrinkle Stretch Gel containing vitamin PP, as a new product from the All-in-One Gel series
for the first time in Japan, and post-launch sales have been strong. It is actively investing in advertising on TV
and social media, mainly for PERFECT ONE Wrinkle Stretch Gel. According to the Company, major cosmetics
manufacturers’ spot beauty essence is in a high price range (¥10,000 to ¥15,000). There are many players andit is a highly-competitive environment, but the Company is rolling out all-in-one type products in the mid pricerange (¥7,150 including tax) which it claims will make it less likely to face competition from major cosmetics
manufacturers and also promises future growth. The Company’s strategy is to extend growth of the Perfect One
brand by putting itself in a position where it is better able to demonstrate its strengths.

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15 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

The growth strategy

The senior generation accounts for over 60% of the Company’s customer database of 5.37mn people (as ofend-March 2021). Leveraging this strength, the Company intends to implement a strategy that maximizes valueof the senior generation customer database. It also wants to enhance brand value by strengthening productcapabilities with a renewal of the mainstay Perfect One All-in-One Gel and rebranding the Perfect One brand.
Furthermore, it aims to raise LTV and acquire new customers through up-selling of wrinkle improvement gel andother high-functionality products, cross-selling of seasonal products and other items, increases in purchasefrequency based on call center proposals, and more active use of the database to promote repurchases bydormant customers.
Regarding PERFECT ONE Wrinkle Stretch Gel, up-selling to existing customers progressed faster than expected,
contributing to higher LTV. In order to develop new customer bases for the Perfect One brand, the Company
utilized male celebrities popular with a wide range of age groups and broadcasted commercials nationwide.
Immediately after starting the commercials, the Company achieved first place in Twitter search trends, and there
was five-time growth in the number of social media account followers on Twitter three months after the launchof the Twitter account, while the number of Instagram followers increased 55 times over in the five months after
the launch. At the same time, the number of new customers in the millennial generation has been showing
rapid growth. Going forward, the Company plans to continue to conduct new commercials and other forms ofadvertising using popular celebrities and increase the name awareness of the Perfect One brand, mainly among
the millennial generation, as well as spread the new common sense of “Providing simple, smart, and effective
skin care.”FISCO thinks the millennial generation has an impression of the Company’s cosmetics as being moderately
expensive products aimed at seniors. In response, the Company wants to develop new customer contact points
aimed at millennial and middle-aged generations, such as digital marketing using social media and drugstores,
and plans to release a new skincare brand for these groups in fall 2021. At present, there are expectations that
the Company will expand sales by putting emphasis on up-selling and cross-selling for the senior generation andimplement a proactive strategy of rolling out a new skincare brand.
(2) EC and digital expansion
The Company intends to promote new customer acquisition in the domestic EC channel by implementing coordinated online and offline measures targeted at middle-aged and millennial generations and bolstering CRM using
the PERFECT ONE app. It increased new customer acquisition volume by 4.3 times YoY through these measuresby placing a QR code that links to the EC site on paper materials and other offline mail order promotions. It also
started the PERFECT ONE app as a communication tool with customers. App downloads rose 5.2 times YoY
thanks to reinforcement of app contents. The Company intends to continue acquiring new customers efficiently
via digital communications with customers, including coordinated online and offline measures.
The Company plans to convert PBX to the cloud and promote advancement of VOC analysis with goals of
improving call center operation efficiency and productivity and deploying chatbot support and AI at the call centerin the future.

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16 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

The growth strategy(3) Brand development and growth for nurturing global brands
The Company promotes the expansion of EC-based overseas sales, focusing on China where the growth potential
is high. In addition to China, the Company is targeting Taiwan, Hong Kong, and ASEAN (Singapore, Vietnam
and Thailand), and North America, and in each country the focus will be on the 20s-40s age groups with highspending power. In China, the sales channel is EC (cross-border EC, RED, Tmall, etc.). The Company is working
to increase recognition and heighten LTV for people in their 20s, who are highly skilled at conveying information
through social media. In live commerce events, the Company has recruited a KOL with 3.5mn followers andholds events on TikTok. In Taiwan and Hong Kong, the sales channels are EC (company website, MOMO, etc.),
direct store/wholesale (variety shops), and mail order, and the strategy is to strengthen brand awareness andpromote multi-channel marketing. In ASEAN, the sales channels are EC (company website, shopee, etc.) anddirect store/ wholesale (variety shops), and the strategy is to deploy mid price range products in view of potential
consumption power. In the North America, utilizing EC (company website), the plan is to increase awarenesstargeting full-scale deployment.
(4) Development of Smart Health Care BusinessWith the global health boom and rising interest in personal healthcare in recent years, the Company launched the
Smart Health Care Business in 1Q FY9/21. It plans to strengthen and expand the business as its second pillarof its business. With EC as the core, the Company will also start distributing products in drug stores, targetingthe millennial and middle-aged generations. In drug stores, the Company has started with medium-sized chain
stores. The Company will distinguish itself in terms of customers and channels, and plans to promote incremental
sales. At FISCO, we believe that it is necessary to keep a close watch on the fact that drug stores may very well
ask the Company to lower its prices.
The smart healthcare concept, which targets customers from the middle-aged to millennial generations advocates“self-reliant health care.” BODY AURA, a supplement that supports the ability to defend oneself (self-defense
capability) in the new normal, is the main product, and the Company has started to sell this product in its own
online shop and at drugstores nationwide. In Smart Health Care Business, it is raising awareness with TV and radio
commercials in sales regions and aims to steadily cultivate business. The existing healthcare concept applied tothe senior generation, meanwhile, advocates “maintaining good health and solving concerns.” Core products are
Rise and shine! Green Vegetable Juice Salad Plus and foods labelled with functions, Loco Attack EX and W HealthGreen Vegetable Juice. From 2H, the Company intends to promote advertising investments in foods labelled withfunctions and reinforcement of new customer acquisition and cross-selling efforts.
(5) Development of new businesses and broadening business scope through M&A
With the aim of achieving further business growth and create new lifestyles in the health and beauty field, in
addition to implementing growth strategies in existing businesses, the Company plans to expand business scopethrough development of new businesses and M&A investments. In the healthcare field, increasing benefit costsof social security and extending the healthy lifespan of citizens are becoming policy concerns for the Japanese
government. In the “Japanese Recovery Strategy -JAPAN is BACK-” strategic market creation plan (Growth
Strategy 2013), the Japanese government presented an outlook for the domestic market related to extending thehealthy lifespan of citizens to reach ¥37trn in 2030. Demand for products that support body maintenance throughfood has risen as a result of the COVID-19 pandemic. Against this backdrop, the Company decided to acquire all
shares of Flatcraft, Inc. and make it a subsidiary at the Board of Directors meeting held on May 19, 2021. Flatcraft
imports, produces, and sells MCT oil, GHEE oil, butter coffee, and other foods. The Company aims to expand
results by combining Flatcraft’s products and sales foundation with its customer base of over 5.3mn cases, mailorder sales knowhow, and wholesale base.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/█ Measures for ESG
Donating PERFECT ONE Whitening Gel to medical personnel
working on the frontline of the COVID-19 pandemic
The Company provided up to 1,000 units of PERFECT ONE Whitening Gel for free via the Heart Stock matching
platform for medical goods and other items and donated 1,200 units of PERFECT ONE Whitening Gel Half Size to
Kyushu University Hospital.
As part of its efforts to realize a decarbonized society, the Company used eco-friendly technology and materials in
the container and cosmetic storage box for PERFECT ONE Whitening Gel. It blended green nano into the plastic
to reduce CO2 emissions during plastic combustion by roughly 60% and uses forest-certified paper in the productpackage. It plans to steadily replace materials in other products as well.
As an initiative to enhance corporate value, the Company has accepted nine seconded employees from JAL NAVIA
Co., Ltd., which handles air ticket reservations, inquiries, and other passenger service tasks, at its call center. Thiseffort is aimed at sharing mutual advice and improving customer satisfaction.

█ Measures for SDGs
The Company addresses SDGs in accordance with its philosophy of being a company that contributes to society.
Since it believes in the importance of healthy and happy employees in order to realize its vision of “Creating Healthy
and Enriched Lives for People around the World,” the Company promotes “Smile Project One” and “Eco ProjectOne” initiatives.
(1) Smile Project One
One of the Company’s mottos is “What We Can Do for Health.” Based on this idea, the Company supports sports
for persons with disabilities, supports food, education, and healthcare around the world, and works throughan organization to eradicate drunk driving. The Company also sponsors local events and promotes regional
revitalization.
(2) Eco Project One
Under the motto of “What We Can Do for Our Planet” and aiming to support areas affected by disasters as wellas preservation of the global environment, the Company carries out a variety of activities, such as encouraging
employees to use personal chopsticks and drinking cups within the Company, as well as collecting plastic bottle
caps.

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18 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.

27-Jul.-2021

4931 Tokyo Stock Exchange First Section

https://corporate.shinnihonseiyaku.co.jp/en/ir/█ Shareholder return policy
Plans to pay a ¥32.5 dividend, an increase of ¥2.5 YoY in FY9/21.
Partially revised shareholder benefits to improve investment appeal
The Company’s basic policy is to continuously and stably return profits to shareholders in accordance with its
financial results, after securing the internal reserves it needs to invest in business development in the future and tomaintain a sound financial structure. In May 2020, it raised the dividend payout ratio from targeting 20% to 30%.
Alongside this, it upwardly revised the FY9/20 period-end dividend per share (annual dividend) from the initial planof ¥19.0 to ¥28.0, and then increased it by an additional ¥2.0 to bring the annual dividend to ¥30.0. For 9/21, theCompany is planning to pay a dividend of ¥32.5, for a dividend payout ratio of 30.3% at the current forecast stage.

Dividend per share and dividend payout ratio
Dividend per share (left)

(¥)
50.00

Dividend payout ratio (right)
30.5

（%）
35.0

30.5

40.00

28.0
20.7

30.00

20.7
(15.4)

20.1

21.0

20.00

14.0
30.5

35.0

30.0

10.00

32.5
7.0

17.5

0.00

0.0
FY9/17

FY9/18FY9/19FY9/20FY9/21 E

Note 1: The dividend payout ratio in the FY9/19 financial results was 15.4%. The reason it is different to 20.7% is the increasein the number of shares during FY9/19.
Note 2: The dividend per share and dividend payout ratio values were calculated assuming that the stock split (250 shares
per share) carried out on September 1, 2017, and the stock split (10 shares per share) on March 1, 2019, wereconducted at the start of FY9/16.
Source: Prepared by FISCO from the Company’s financial results and supplementary briefing material

The Company decided to conduct share buybacks at the Board of Directors’ meeting on May 12, 2021 for the
purpose of improving capital efficiency and implementing flexible capital policy aimed at business expansion. The
buyback program calls for buying up to 280,000 common stocks and a total of ¥600mn in acquisition value withan acquisition period of May 13 to October 29, 2021.

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19 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Shinnihonseiyaku Co., Ltd.
4931 Tokyo Stock Exchange First Section

27-Jul.-2021
https://corporate.shinnihonseiyaku.co.jp/en/ir/

Shareholder return policy

Additionally, the Company partially revised the shareholder benefit program with aims of improving investment appeal,
promoting understanding of the business, and encouraging medium to- long-term ownership. For shareholders
with 100 to 299 shares, it kept the existing gift of Moisture Gel 75g (worth ¥4,000) in cases ownership at less thansix months but updated gift content to PERFECT ONE Whitening Gel and Rise and shine! Green Vegetable Juice
Salad Plus (worth ¥8,500) in cases of ownership for six months or longer. The switch from Moisture Gel to PERFECTONE Whitening Gel for the latter lifted its total value from ¥7,500 to ¥8,500. For shareholders with 300 shares or
more, it provides Moisture Gel 75g, Rise and shine! Green Vegetable Juice Salad Plus, treatment shampoo, and avoucher for ¥5,000 in purchases of the Company’s products (worth ¥15,000 in total) in cases ownership for lessthan six months (unchanged) and PERFECT ONE Wrinkle Stretch Gel, Rise and shine! Green Vegetable Juice Salad
Plus, SP Night Cream (seasonal product), and a voucher for ¥5,000 in purchases of the Company’s products (worth¥30,000 in total) in cases of ownership for six months or longer. The switch from Moisture Gel to PERFECT ONE
Wrinkle Stretch Gel for the latter lifted its total value from ¥27,000 to ¥30,000. The Company hopes to encourage
long-term ownership of its shares by adding benefits for shareholders who own the shares for six months or longer.
The conditions for a continuous holding period of 6 months or more are that the same shareholder number isrecorded consecutively on the Company’s shareholder registry on September 30, which is the record date, of eachyear, and 6 months prior to that on March 31; that the number of shares held during the same period continues
being held; and that the number of shares is greater than or equal to the prescribed number of shares.
Description of the Company’s shareholder benefits program[Current][Revised]

No. ofsharesheld

Period held

Description of benefit

Equivalentvalue

100 sharesto 299sharesLess than
6 months

Moisture Gel 75g¥4,000

6 months
or longer

Moisture Gel 75g
Rise and Shine! Green Vegetable
Juice Salad Plus

¥7,500300 sharesor moreLess than
6 months

Moisture Gel 75g
Rise and Shine! Green Vegetable
Juice Salad Plus
Treatment Shampoo
Gift voucher for the Company’s
merchandise (worth ¥5,000)¥15,000

6 months
or longer

Moisture Gel 75g
Rise and Shine! Green Vegetable
Juice Salad Plus
SP Night Cream (a seasonal product)
Gift voucher for the Company’s
merchandise (worth ¥5,000)¥27,000

No. ofsharesheld

Period held

Description of benefit

100 sharesto 299sharesLess than
6 months

Moisture Gel 75g¥4,000

6 months
or longer

Whitening Gel
Rise and Shine! Green Vegetable Juice Salad
Plus¥8,500300 sharesor moreLess than
6 months

Moisture Gel 75g
Rise and Shine! Green Vegetable Juice
Salad Plus
Treatment Shampoo
Gift voucher for the Company’s merchandise(worth ¥5,000)¥15,000

6 months
or longer

Wrinkle Stretch Gel
Rise and Shine! Green Vegetable Juice
Salad Plus
SP Night Cream (a seasonal product)
Gift voucher for the Company’s merchandise(worth ¥5,000)¥30,000

Source: Prepared by FISCO from the Company’s press releaseWe encourage readers to review our complete legal statement on “Disclaimer” page.

20 20

Equivalentvalue

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