COMPANY RESEARCH AND ANALYSIS REPORT

G-7 HOLDINGS INC.
7508
Tokyo Stock Exchange First Section

22-Jan.-2020
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Overview of 1H FY3/20 results. . ...................................................................................................................

01

2. Forecast for FY3/20.....................................................................................................................................

01

3. Medium-term business plan .. ......................................................................................................................

01

4. Shareholder return policy....................... ......................................................................................................

02■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. AUTOBACS and car-related business. . .. ......................................................................................................

03

2. Gyomu Super and quality food business. ....................................................................................................

03

3. Other Businesses.........................................................................................................................................

04■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Overview of 1H FY3/20 results. . ............. ......................................................................................................

05

2. Performance trends by business segment. ..................................................................................................

06

3. Financial condition and key financial indicators. ..........................................................................................

10■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. Forecast for FY3/20.....................................................................................................................................

11

2. Segment outlook. . .................................. ......................................................................................................

12■Medium to long-term growth strategy-------------------------------------------------------------------------------------------------- 15
1. Medium-term business plan .. ......................................................................................................................

15

2. Long-term vision..........................................................................................................................................

17■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17

We encourage readers to review our complete legal statement on “Disclaimer” page.

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/██SummaryStrong performance in both the AUTOBACS business and the
Gyomu Super business, with progress also made in M&A talks
G-7 HOLDINGS INC. <7508> is a holding company that owns subsidiaries operating the largest franchises of
AUTOBACS and Gyomu Super stores in Japan. It excels at store profitability with emphasis on productivity per
employee and inventory turnover rates. It is also promoting development of the agricultural business and foodprocessing and supplying, restaurant business, as well as international (focusing on Asia) business. The Company
is promoting growth strategies using M&As.
1. Overview of 1H FY3/20 results
The Company reported 1H FY3/20 (Apr-Sep 2019) consolidated results with ¥64,261mn in net sales (+8.6% YoY)and ¥3,182mn in ordinary income (+65.5%), setting all-time highs for half-year values. Due to the last-minute demand
before the consumption tax hike, the mainstay AUTOBACS and Gyomu Supers businesses performed well anddrove overall results. In particular, in the AUTOBACS business, sales of tires and drive recorders increased sharply,
and existing-store sales increased 12.0% YoY. In the Gyomu Super business, existing-store sales grew at a highrate of 9.6% due to the tapioca boom and other factors. As of the end of September 2019, the number of domestic
group stores increased by 12 compared with the end of FY3/19 (13 new store openings and 1 store closure) to
406 stores, and the improvement in profitability at unprofitable stores also contributed to the increase in profit. As a
new business format, in September 2019 the Company opened one store of Kingram, a recycle shop that handles
precious metals, designer brand products and other items.
2. Forecast for FY3/20
The Company left its FY3/20 forecast unchanged aiming for ¥140,000mn in net sales (+14.3%) and ¥5,500mn inordinary profit (+9.6%). Considering the fact that there will be a recoil decline following the consumption tax rate
hike, sales are likely to fall slightly, but the Company will likely be able to achieve its profit forecast, and it is expected
to again set new record-high earnings. This is because sales of drive recorders in the AUTOBACS business remainstrong, and the Gyomu Super business is expected to enjoy strong sales in 2H due the growing preference for low
prices among consumers. In addition, in 2H the Company plans to open 2 stores in the AUTOBACS business, 11
stores in the Gyomu Super business, and 22 stores in the Other business category, so the profit margin may decline
compared to 1H due to increases in store opening costs and personnel costs.
3. Medium-term business plan
The Company’s medium-term management plan aims for ¥170bn in sales and ¥7bn in ordinary profit in FY3/21,
the final fiscal year. The Company is currently in M&A talks, with the aim of achieving its targets by advancing M&A
along with growth in existing businesses. Target fields include those that are strongly-related to existing businesses,
such as food supermarkets as well as car-related businesses. The Company is aiming to conclude an agreement
during FY3/20, and future developments need to be watched. The Company plans to fund M&A with cash on hand.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Summary

4. Shareholder return policy
In light of healthy profit expansion, the Company plans to increase the dividend in a fifth straight year with an ¥86.0
dividend in FY3/20 (31.1% dividend payout ratio), an increase of ¥8.0 YoY. It targets a dividend payout ratio of about
30%. We expect further dividend hikes if profits continue to grow.
Key Points
Primarily generates earnings from the AUTOBACS and car-related business and the Gyomu Super and quality
food business• Both the AUTOBACS business and the Gyomu Super business posted record-high results, partially due to thelast-minute rush in demand prior to the consumption tax rate hike• Advancing M&A talks with a target of ¥170bn in net sales in FY3/21•

㻾 㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼞㼐㼕㼚㼍㼞㼥㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻡㻘㻡㻜㻜㻝㻢㻜㻘㻜㻜㻜

㻢㻘㻜㻜㻜

㻡㻘㻜㻝㻥
㻠㻘㻡㻢㻤
㻠㻘㻜㻢㻞

㻝㻞㻜㻘㻜㻜㻜

㻠㻘㻡㻜㻜

㻟㻘㻞㻞㻜

㻤㻜㻘㻜㻜㻜

㻠㻜㻘㻜㻜㻜

㻞㻘㻡㻝㻞㻤㻤㻘㻞㻢㻝

㻟㻘㻜㻜㻜㻝㻜㻟㻘㻤㻥㻡

㻝㻝㻜㻘㻟㻣㻣

㻝㻝㻥㻘㻤㻝㻢

㻝㻞㻞㻘㻡㻜㻞

㻝㻠㻜㻘㻜㻜㻜㻝㻘㻡㻜㻜㻜㻜㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜㻌㻱

Source: Prepared by FISCO from the Company's financial results██Business overview
Primarily generates earnings from AUTOBACS and car-related
business and Gyomu Super and quality
The Company’s operations consist of three operating segments: AUTOBACS and car-related business, Gyomu
Super and quality food business, and Other Businesses. Looking at the FY3/19 composition of net sales bybusiness segment, we see that the AUTOBACS and car-related business represented 31.0% and the Gyomu Superand quality food business 65,3%, and in profits, they represented 39.7% and 59.5%, respectively, with these twobusiness segments accounting for more than 90% of overall operations.

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Business overview㻿㼍㼘㼑㼟㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㼟㻌㻔㻲㼅㻟㻛㻝㻥㻕㻭㼁㼀㻻㻮㻭㻯㻿㻌㼍㼚㼐㻌㼏㼍㼞㻙㼞㼑㼘㼍㼠㼑㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㻝㻜㻜㻑㻳㼥㼛㼙㼡㻌㻿㼡㼜㼑㼞㻌㼍㼚㼐㻌㼝㼡㼍㼘㼕㼠㼥㻌㼒㼛㼛㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟

㻜㻚㻤㻑

㻟㻚㻣㻑

㻥㻜㻑

㻤㻜㻑
㻣㻜㻑
㻢㻜㻑

㻡㻥㻚㻡㻑

㻢㻡㻚㻟㻑

㻡㻜㻑
㻠㻜㻑
㻟㻜㻑
㻞㻜㻑
㻝㻜㻑

㻟㻥㻚㻣㻑

㻟㻝㻚㻜㻑

㻜㻑
㻺㼑㼠㻌㼟㼍㼘㼑㼟㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑

Source: Prepared by FISCO from Company materials

1. AUTOBACS and car-related business
The AUTOBACS and car-related business segment mainly consists of AUTOBACS franchise activities including
car product sales and maintenance handled by G-7 AUTO SERVICE CO., LTD., motorcycle product sales andmaintenance handled by G-7 BIKE WORLD CO., LTD., as well as car-related business in Malaysia and Thailand,and export sale of cars handled by G-7 Crown Trading Co., Ltd.
AUTOBACS-related sales represent approximately 80-90% of segment sales, with 73 AUTOBACS-related storesin Japan (66 AUTOBACS stores and seven AUTOBACS Express stores) and two AUTOBACS stores in Malaysia asof the end of September 2019, making it the largest franchisee within the AUTOBACS group stores (593 domestic
stores and 46 overseas stores). Stores are located predominantly in Hyogo, Kyoto, Fukui, Okayama, Hiroshima,
Chiba, and Ibaraki prefectures. Hyogo is particularly important with 39 stores, or just under 60% of the Company’s
entire network. Store management places strong emphasis on productivity per employee, gross profit margin andinventory turnover rates, and the franchise business is notable for maintaining the highest profitability within the
AUTOBACS group. Other car-related businesses (the Company’s own initiatives) include two CRYSTAL SEVEN
stores offering carwash and coating services, one TIRE SENMONKAN tire specialty store, seven BP centers (bodyrepair and coating), and one Suzuki Cars store for new cars and buying and selling used cars in Osaka.
The BIKE WORLD business consisted of 15 stores at the end of September 2019 with 12 stores in Japan, two storesin Malaysia, and one store in Thailand. G-7 Crown Trading that were made into a subsidiary in 2017 conducts export
sales of automobiles mainly in Southeast Asia. Sales ratios are just under 10% respectively.
2. Gyomu Super and quality food business
The Gyomu Super and quality food business consists of G-7 SUPER MART Co., Ltd., which has a Gyomu Super
franchisee operation, G-7 MEAT TERABAYASHI Co., Ltd., which mainly runs a fresh meat retail business, and G7
JAPAN FOOD SERVICE CO., LTD., which operates food and restaurant businesses.

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Business overview

G-7 SUPER MART is a mega-franchisee of Gyomu Super representing 80% of segment sales, with its 139 supermarket outlets as of the end of September 2019, giving it the largest scale among the 840 Gyomu Super groupstores. Store rollouts are predominantly centered in the Kanto, Chubu, Kansai, Kyushu, and Hokkaido regions.
G-7 MEAT TERABAYASHI, which provides just over 10% of sales, had 105 TERABAYASHI retail butcher shops asof the end of September 2019. Roughly 90% of these stores are set up as tenants at Gyomu Super and Megumi
no Sato sites, and the others are primarily located at department stores and shopping malls.
G7 JAPAN FOOD SERVICE, which accounts for just under 10% of sales, discovers local delicacies and uniquelocal products and handles wholesale supply to department stores and other retailers as quality foods. It also
develops, manufactures, and sells private-brand foods, engages in online sales, and operates restaurants andsweets businesses (restaurants and sweets businesses are booked under the Other Businesses segment).
3. Other Businesses
Other Businesses includes G7 AGRI JAPAN CO., LTD., which operates the Megumi no Sato farmers’ market chain,
G7 RETAIL JAPAN CO., LTD., which manages real estate, DAISO discount stores (100 yen shops), reuse stores,
fitness clubs and golf schools, restaurant business, sweets business, coin laundry service business, and overseas
business (excluding AUTOBACS and BIKE WORLD businesses).
For Megumi no Sato, there are 19 stores in Kansai and Tokyo Metropolitan regions as of the end of September
2019. This business changed its format from outright purchase sales to consignment sales (booking about 20% of
the sales price as fee income under sales) from April 2018.
The coin laundry service business locates mammaciao stores (MIS Co., Ltd.) at AUTOBACS sites and had 5 storesat the end of September 2019. In restaurant business, the Company began IKINARI STEAK (Pepper Food Service
Co., Ltd.) and has 8 roadside-type stores. The sweets business consists of 3 stores of Yamaya Honpo (Yamaya
Taiyaki Honpo Co., Ltd.), 1 taiyaki (fish-shaped sweet) specialty shop, and 1 shop each of a cream-puff store anda custard apple pie store. As of the end of September 2019, it also operates 2 BAKE CHEESE TART (BAKE Inc.),
a cheese tart specialty shop, but the Company plans to withdraw from the business in FY3/20. These are take-out
specialty shops. Other businesses include 20 sites for Curves (Curves Japan Co., Ltd.), a workout and training
club for women, three sites for golf lesson school Step Golf (stepgolf Inc.), 5 stores for reuse shop business (1Mega Recycle Kingdom, 1 Reuse Kingdom, 2 Ryohin Kaikan, and 1 Kingram), and 2 stores for 100 Yen shop Daiso(Daiso-sangyo Inc.). This segment covers a wide range of businesses.
In the Overseas business (excluding the AUTOBACS and car-related business), the Company opened one new
IKINARI STEAK outlet in Taiwan, and exited the small-scale agricultural business (farm operations) in Myanmar andthe car-related business in Cambodia.

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 17

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

G-7 HOLDINGS INC.

22-Jan.-2020

7508 Tokyo Stock Exchange First Section

http://www.g-7holdings.com/

Business overview

Major consolidated subsidiaries
Business segment

Capitalcontribution
ratio

Company name100.0%

Operator of AUTOBACS, etc.

100.0%

Operator of BIKE WORLD, etc.

51.0%

New vehicle and used vehicle export sales

G-7 SUPER MART CO., LTD.

100.0%

Operator of Gyomu Super, etc.

G7 JAPAN FOOD SERVICE CO., LTD.

100.0%

Manufacturing and wholesale of food products and beverages,
operator of restaurants, etc.

G-7 MEAT TERABAYASHI CO., LTD.

100.0%

Retail sales of meats and processed livestock products

G7 RETAIL JAPAN CO., LTD.

100.0%

Handles real estate development for the Group and operates recycling
shops, 100-yen shops, fitness clubs, and indoor golf schools

G7 AGRI JAPAN CO., LTD.

100.0%

Operator of Megumi no Sato, etc.

G-7 AUTO SERVICE CO., LTD.
AUTOBACS and
G-7 BIKE WORLD CO., LTD.
car-related business
G-7 Crown Trading Co., Ltd.
Gyomu Superand quality foodbusiness

Other Businesses

Business description

Source: Prepared by FISCO from Company materials██Results trends
1H FY3/20 ordinary profit increased considerably by 65.5% YoY
1. Overview of 1H FY3/20 results
The Company reported 1H FY3/20 results with ¥64,261mn in net sales (+8.6% YoY), ¥3,085mn in operating profit(+58.8%), ¥3,182mn in ordinary profit (+65.5%), and ¥2,092mn in profit attributable to owners of parent (+75.0%),
setting all-time highs for half-year values again. Results were driven by strong results in the mainstay AUTOBACS
and Gyomu Super businesses. The increase in profits was also driven by efforts to control costs and a decline inunprofitable stores and improvement in their profitability.
The Company does not disclose its plans, but net sales were slightly lower than forecast due to delays in opening
new stores, however profits exceeded the forecast due to the significant increase in sales of profitable tires in the
AUTOBACS business as well as stronger-than-expected existing-store sales in the Gyomu Super business. The
number of domestic stores in the group increased by 12 stores from the end of the previous fiscal year to 406 stores(13 openings and 1 closure).
Consolidated results for 1H FY3/20(¥mn)
1H FY3/19

1H FY3/20

Results

vs. net sales

Results

vs. net sales

Net sales

59,145-64,261

-

YoY
8.6%

Cost of sales

43,94874.3%

47,532

74.0%

8.2%

SG&A expenses

13,25322.4%

13,643

21.2%

2.9%

Operating income

1,943

3.3%

3,085

4.8%

58.8%

Ordinary income

1,923

3.3%

3,182

5.0%

65.5%

Profit attributable toowners of parent

1,195

2.0%

2,092

3.3%

75.0%

Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Results trends

Both the AUTOBACS and Gyomu Super businesses posted recordhigh earnings, partially due to the last-minute rush in demand prior
to the consumption tax rate hike
2. Performance trends by business segment(1) AUTOBACS and car-related business
AUTOBACS and car-related business posted ¥18,882mn in net sales (+8.6% YoY) and ¥1,087mn in operating
income (+216.9%). G-7 Auto Service, which centers on the domestic AUTOBACS business, recorded a 10.1%
YoY growth in net sales and a 255.0% increase in ordinary profit, setting new record highs on a fiscal half-yearbasis. There were no new store openings or store closures during 1H FY3/20, and the business was operating
73 stores at the end of 1H, a decline of 1 store compared to the end of 1H FY3/19.

㻭 㼁 㼀㻻㻮㻭㻯㻿㻌㼍㼚㼐㻌㼏㼍㼞㻙㼞㼑㼘㼍㼠㼑㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟;ίŵŶͿ㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕;ίŵŶͿ㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻞㻜㻘㻜㻜㻜

㻝㻘㻞㻜㻜
㻝㻘㻜㻤㻣

㻝㻡㻘㻜㻜㻜

㻥㻜㻜㻝㻜㻘㻜㻜㻜
㻝㻣㻘㻟㻤㻤

㻝㻢㻘㻤㻠㻞
㻡㻘㻜㻜㻜

㻟㻠㻥

㻟㻠㻟

㻝㻴㻌㻲㼅㻟㻛㻝㻤㻝㻴㻌㻲㼅㻟㻛㻝㻥㻢㻜㻜㻝㻤㻘㻤㻤㻞㻟㻜㻜㻜㻜㻝㻴㻌㻲㼅㻟㻛㻞㻜（ &z）

Source: Prepared by FISCO from Company materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Results trends㻳㼞㼛㼣㼠㼔㻌㼕㼚㻌㼠㼔㼑㻌㻭㼁㼀㻻㻮㻭㻯㻿㻌㼑㼤㼕㼟㼠㼕㼚㼓㻙㼟㼠㼛㼞㼑㻌㼟㼍㼘㼑㼟㻌㻔㼅㼛㼅㻕㻳㻙㻣㻭㼁㼀㻻㻮㻭㻯㻿

㻡㻜㻑

㻠㻜㻑
㻟㻜㻑
㻞㻜㻑

㻝㻜㻑
㻜㻑
㻙㻝㻜㻑
㻙㻞㻜㻑
㻭㼜㼞㻙㻝㻤

㻶㼡㼘㻙㻝㻤

㻻㼏㼠㻙㻝㻤

㻶㼍㼚㻙㻝㻥

㻭㼜㼞㻙㻝㻥

㻶㼡㼘㻙㻝㻥

Source: Prepared by FISCO from Company materialsIn the AUTOBACS business, domestic existing-store sales rose 12.0% YoY, slightly outpacing the 11.4% increasein domestic existing-store sales growth for the AUTOBACS Group in the same period, and it achieved net sales
above that of the group overall. Looking at sales trends by major categories, all categories posted YoY increases
in net sales. Tires sales increased 20.1% YoY, while sales of car electronics increased significantly by 28.4%.
Tire sales in September increased five times versus the previous September due to notifications about priceincreases from October and the rush in demand ahead of the October increase in the consumption tax rate.
Sales were also boosted by strong sales of drive recorders with rear cameras, partially due to the impact of higher
awareness of safe driving and taigating accidents. In consumables, oil was up 4.2% and batteries rose 4.5%, bothsustaining solid trends. The high value-added service division (car inspections and repairs) also posted a strong
9.8% increase in net sales thanks to efforts to increase the ability of stores to draw in customers. Profit increased
significantly, largely due to sales of profitable tires and strong performance by the service division.
G-7 BIKE WORLD, which posted a profit in FY3/19, reported a slight increase in sales and profit. Positive
contributions came from an improved gross margin due to narrowing the product lineup to popular products amid
ongoing weakness in the domestic motorcycle market, and ongoing efforts to control expenses. The number of
BIKE WORLD stores was flat YoY at 12 stores.
In overseas stores, the Company runs two AUTOBACS stores and two BIKE WORLD stores in Malaysia andone BIKE WORLD store in Thailand. Although the impact on overall results is still minimal, sales are gradually
increasing, with sales increasing 2.2% YoY in Malaysia and 10% YoY in Thailand. In profits, the two BIKE WORLD
stores in Malaysia have already become profitable, but the AUTOBACS stores and the BIKE WORLD store in
Thailand are still not profitable. G-7 Crown Trading posted a YoY decline in both net sales and profit. Sales to
Malaysia, the main export destination, have continued to decline due to the introduction of import regulations
following the 2018 regime change, and the decline in purchasing channels also contributed to the drop in sales.

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Results trends(2) Gyomu Super and quality food businessGyomu Super and quality food business reported ¥42,920mn in net sales (+8.8% YoY) and ¥1,823mn in operating
income (+25.3%). G-7 SUPER MART, which operates the mainstay Gyomu Super, booked increases of 10.5%
YoY in sales and 26.0% in ordinary profit, once again setting all-time highs on a fiscal half-year basis and driving
overall profit growth. Gyomu Super opened 1 new store in both Tokyo and Kanagawa Prefecture, increasing thenumber of stores at the end of 1H FY3/20 to 139 stores, which is three more than at the end of 1H FY3/19. The
Company plans to open 11 new stores in FY3/20, and although the pace of new store openings is a little behindschedule, existing-store sales grew by 9.6% YoY, partially the result of the increase in customers due to thetapioca boom. Profit margin per store also improved, thanks to the increase in sales as well as efforts to reduce
waste losses and control expenses.

㻳㼥㼛㼙㼡㻌㻿㼡㼜㼑㼞 㼍㼚㼐㻌㼝㼡㼍㼘㼕㼠㼥㻌㼒㼛㼛㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟;ίŵŶͿ㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕;ίŵŶͿ㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻝㻘㻤㻞㻟㻡㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻝㻘㻠㻡㻡

㻠㻜㻘㻜㻜㻜

㻝㻘㻡㻜㻜

㻝㻘㻞㻟㻝
㻟㻜㻘㻜㻜㻜

㻝㻘㻜㻜㻜㻞㻜㻘㻜㻜㻜

㻟㻥㻘㻠㻠㻞

㻟㻣㻘㻜㻣㻝

㻠㻞㻘㻥㻞㻜
㻡㻜㻜㻝㻜㻘㻜㻜㻜

㻜㻜㻝㻴㻌㻲㼅㻟㻛㻝㻤㻝㻴㻌㻲㼅㻟㻛㻝㻥

Source: Prepared by FISCO from Company materials㻝㻴㻌㻲㼅㻟㻛㻞㻜（&z）

㻳㼞㼛㼣㼠㼔㻌㼕㼚㻌㼠㼔㼑㻌㻳㼥㼛㼙㼡㻌㻿㼡㼜㼑㼞 㼑㼤㼕㼟㼠㼕㼚㼓㻙㼟㼠㼛㼞㼑㻌㼟㼍㼘㼑㼟㻌㻔㼅㼛㼅㻕㻳㻙㻣㼀㼛㼠㼍㼘㻌㼛㼒㻌㼐㼕㼞㼑㼏㼠㼘㼥㻌㼛㼜㼑㼞㼍㼠㼑㼐㻌㼟㼠㼛㼞㼑㼟

㻝㻢㻑
㻝㻠㻑
㻝㻞㻑
㻝㻜㻑
㻤㻑
㻢㻑
㻠㻑
㻞㻑

㻜㻑
㻭㼜㼞㼕㼘㻙㻝㻤

㻶㼡㼘㼥㻙㻝㻤

㻻㼏㼠㼛㼎㼑㼞㻙㻝㻤

Source: Prepared by FISCO from Company materials㻶㼍㼚㼡㼍㼞㼥㻙㻝㻥㻭㼜㼞㼕㼘㻙㻝㻥

㻶㼡㼘㼥㻙㻝㻥

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 17

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

G-7 HOLDINGS INC.

22-Jan.-2020

7508 Tokyo Stock Exchange First Section

http://www.g-7holdings.com/

Results trends

G-7 MEAT TERABAYASHI posted strong results with a 6.1% YoY gain in sales and 31.9% rise in ordinary profit.
The number of TERABAYSHI stores at the end of 1H FY3/20 was up 2 stores YoY at 105 stores, with 1 opening
each in both Fukushima Prefecture and Tokyo (the Tokyo store was a joint opening with a Gyomu Super store).
Increased demand for meat and the positive effect of the joint opening with Gyomu Super lifted the profit margin.
Meanwhile, at G7 JAPAN FOOD SERVICE, there was a decline in both sales and profit in the food processing andwholesale businesses. This was mainly the result of the decline in sales of quality foods.
(3) Other Businesses
The Other Businesses segment recorded ¥2,458mn in net sales (+6.2% YoY) and ¥35mn in operating income(-3.3%). Despite the decline in sales at G7 AGRI JAPAN, which operates Megumi no Sato direct-sale agricultural
produce sites, due to the calming of vegetable prices which has been soaring in the year-earlier period due tonatural disasters and other factors, the improvement in earnings at unprofitable stores led to an increase in profit.
The number of Megumi no Sato stores at the end of 1H FY3/20 was up 3 stores YoY at 24 stores, with 4 newstore openings in Osaka Prefecture and 1 in Tokyo.

㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟;ίŵŶͿ㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

㻠㻘㻡㻜㻜

㻟㻢㻌

;ίŵŶͿ
㻝㻜㻜

㻟㻡㻌

㻙㻣㻟㻌

㻟㻘㻜㻜㻜

㻝㻘㻡㻜㻜

㻙㻝㻜㻜

㻟㻘㻞㻠㻡

㻙㻟㻜㻜
㻞㻘㻟㻝㻠

㻞㻘㻠㻡㻤

㻝㻴㻌㻲㼅㻟㻛㻝㻥㻝㻴㻌㻲㼅㻟㻛㻞㻜㻜㻙㻡㻜㻜㻝㻴㻌㻲㼅㻟㻛㻝㻤（㻲㼅）
Source: Prepared by FISCO from Company materialsIn the restaurant business, the Company started operating IKINARI STEAK stores from FY3/19 and newly opened
two stores in Osaka Prefecture, bringing the total number of IKINARI STEAK stores as of the end of 1H FY3/20 toeight (six more than at the end of 1H FY3/19). While customer draw varies by individual store, some stores havereached profitability at the monthly level. Meanwhile, in the sweets business, there were no new store openings,
while one BAKE cheesecake tart store was closed.
In the reuse business, the Company operates stores with three brands – Ryohin Kaikan (Best Buy Co., Ltd.),
Mega Recycle Kingdom, and Reuse Kingdom. In this business, earnings continues to struggle. As a result, theCompany opened one new Kingram (Best Buy) store in Hyogo Prefecture as a new business format as a recycle
shop for precious metals and designer brand products. Kingram will procure high-quality reuse products and sellthem to Ryohin Kaikan and others to shore up overall sales in the reuse business and aim for profitability. The
number of reuse stores was five stores, including Kingram.

We encourage readers to review our complete legal statement on “Disclaimer” page.

09 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Results trends

The coin laundry service business (mammaciao) remained at five stores at the end of 1H FY3/20 (flat YoY).
Profitability is gradually improving, as two stores achieved profitability, two stores reached the break-even line,
and one store was unprofitable. All stores are likely to become profitable as depreciation costs shrink. These
stores have been well received because they have machines for washing and drying not only clothes, but also
futons, carpets, and other items that cannot easily be washed at home. The membership of Curves, a workout
and training club for women, is growing amid heightened health awareness, and the number of sites increased
to 20 (2 more compared to the end of 1H FY3/19). In the overseas business (restaurant and agricultural), theCompany exited the agricultural business in Myanmar and the car-related business in Cambodia, and currently
only operates one IKINARI STEAK outlet in Taiwan.

Financial base has been improving due to expanded earnings
3. Financial condition and key financial indicators
Looking at financial conditions at the end of 1H FY3/20, total assets had increased ¥240mn from the end of FY3/19
to ¥44,931mn. Main changes were a decrease of ¥498mn in cash and deposits and increases of ¥379mn in notes
and accounts receivable – trade and ¥251mn in merchandise and finished goods under current assets and increasesof ¥112mn in leasehold and guarantee deposits and ¥86mn in investment securities under fixed assets.
Total liabilities at the end of 1H FY3/20 decreased by ¥1,365mn YoY to ¥23,822mn, mainly due to decreases of¥553mn in interest- bearing debt, ¥597mn in corporate taxes payable, and ¥297mn in bonus allowances. Net assets
at the end of 1H FY3/20 increased by ¥1,606mn YoY to ¥21,108mn. This mainly reflects a ¥1,569mn increase inretained earnings with the recording of profit attributable to owners of parent and payment of dividends.
In financial indicators, the equity ratio, which reflects soundness, climbed by 3.3ppt YoY to 46.9%. The interest-bearing debt ratio, meanwhile, fell by 6.1ppt to 39.1%. Financial health continues to improve with rising profits.
Net cash (cash and deposits – interest-bearing debt) were mostly unchanged YoY at ¥5,769mn. The Company
intends to continue active pursuit of M&A as a growth strategy and is budgeting about ¥5bn each year to fund these
initiatives. It is likely to utilize in-hand cash for M&A-related outlays as it holds abundant level of cash and deposits
exceeding ¥14bn.
Consolidated balance sheet(¥mn)
Current assets(Cash and deposits)

FY3/16

FY3/17

FY3/18

FY3/191H FY3/20

Change17,111

18,542

21,08924,57524,542

-33

8,242

9,395

11,27914,51814,020

-498

5,341

5,597

5,817

5,767

6,018

251

Fixed assets

19,042

19,076

20,505

20,115

20,389274

Total assets

36,154

37,61841,594

44,691

44,931240

Total liabilities

21,971

21,96023,861

25,18823,822-1,365(Merchandise and finished goods)

8,342

8,426

8,306

8,804

8,251

-553

14,183

15,65817,732

19,502

21,1081,606

Equity ratio

38.1%

40.8%

41.7%

43.6%

46.9%

Interest-bearing debt ratio

60.5%

54.9%

47.8%

45.2%

39.1%

-100

969

2,973

5,714

5,769

(Interest-bearing debt)
Net assets
Key financial indicators(Financial strength)

Net cash

Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 17

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

G-7 HOLDINGS INC.

22-Jan.-2020

7508 Tokyo Stock Exchange First Section

http://www.g-7holdings.com/██Business outlook
Aiming to absorb the recoil decline in sales following theconsumption tax rate increase and achieve record high profit once
again in FY3/20
1. Forecast for FY3/20
The Company left its FY3/20 forecast unchanged aiming for ¥140,000mn in net sales (+14.3%), ¥5,300mn inoperating profit (+5.6%), ¥5,500mn in ordinary profit (+9.6%), and ¥3,350mn in profit attributable to owners ofparent (+10.2%). In 1H, the Company’s net sales were 45.9% of the full fiscal year forecast, while operating profit
was 58.2% of the full fiscal year forecast. Both of these were higher than the average over the past three years (netsales, 48.0%; operating profit,37.8%), but it is possible that full fiscal year net sales will fall short of the Company’s
forecast due to a number of factors. These factors include concern about a recoil decline in sales from Octoberonward for AUTOBACS due to the last-minute surge in demand in September ahead of the consumption tax rateincrease, the fact that earnings tend to peak in 3Q when demand for snow tires is expected, and there is a risk offluctuation in sales due to weather conditions, and the fact that the Company has ambitious plans to open 35 newstores for the group overall in 2H, compared to 13 new store openings in 1H. However, we believe it is highly likelythat the Company will achieve its profit forecast based on the fact that the progress rate through 1H was high, andbecause in 2H the Company will continue its efforts to increase profit per store (boost ability to draw in customers,
control inventories and expenses, etc.)
Consolidated forecast for FY3/20(¥mn)
FY3/19FY3/20YoY

1H progress
rate

122,502-140,000

-

14.3%

45.9%

Operating income

5,017

4.1%

5,300

3.8%

5.6%

58.2%

Ordinary income

5,019

4.1%

5,500

3.9%

9.6%

57.9%

Profit attributable to owners of parent

3,041

2.5%

3,350

2.4%

10.2%

62.4%

Earnings per share (¥)

251.12

Results
Net salesvs. net sales

Forecast

vs. net sales

276.62

Source: Prepared by FISCO from the Company's financial results

The store-opening plan by store type consists of 11 stores each for Gyomu Super and TERABAYSHI, 3 stores for
Megumi no Sato, 2 stores for AUTOBACS, 5 stores for IKINARI STEAK, and 2 stores for Curves, bringing the total
to 35 stores.

We encourage readers to review our complete legal statement on “Disclaimer” page.

11 17

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

G-7 HOLDINGS INC.

22-Jan.-2020

7508 Tokyo Stock Exchange First Section

http://www.g-7holdings.com/

Business outlook

Period-end domestic store volume and openings and closures
Store name

End-FY3/19
Number ofstores1H FY3/20
Openings

ClosuresEnd-1HFY3/20
Number ofstores2H FY3/20
Number of
new store
openings
2

End-FY3/20
Numberof stores(forecast)

AUTOBACS

66

66

AUTOBACS Express

7

7

68
7

BIKE WORLD

12

12

13

Gyomu Super

137

2

139

11

150

TERABAYASHI

103

2

105

11

116

Gekiyasu Super Megumi no Sato

1

1

Green's K

1

1

1

Megumi no Sato

19

5

24

3

27

IKINARI STEAK

6

2

8

5

13

Nanatsu no Tsubo

1

BAKE

3

Taiyaki Specialty Store Yamaya Honpo

1

1

1

2

2

3

3

3

CROQUANTCHOU ZAKUZAKU

1

1

1

RINGO

1

1

1

mammaciao

555Mega Recycle Kingdom

1

1

1

Reuse Kingdom

1

1

1

Ryouhin Kaikan

2

2

2

Kingram (new store format)

-

1

1

Curves19

1

20

Step Golf

3

3

Daiso

2

2

Total

394

1

13

1

406

1
2

22
3
2

35

441

Source: Prepared by FISCO from Company materials

The plan is to aggressively open Gyomu Super and TERABAYASHI
stores
2. Segment outlook(1) AUTOBACS and car-related businessIn AUTOBACS and car-related business, the Company expects G-7 AUTO SERVICE, the main business, todeliver ¥35,327mn in net sales (+8.6% YoY), and ¥2,016mn in operating profit (+13.1%). In order to achieve these
forecasts, the Company will need net sales to increase by 7% YoY. This will be a bit challenging considering the
expected recoil decline in 3Q FY3/20 following the last-minute rush in demand. Looking at the quarterly sales trend
in the AUTOBACS and car-related business before and after the previous consumption tax rate increase (5% →8% in April 2014), there was a 17.5% YoY increase in sales in 4Q FY3/14 immediately prior to the consumption
tax rate increase, but sales fell dramatically immediately after the tax hike, declining 10.5% YoY in 1Q FY3/15,
and even thereafter sales remained weak due to the downturn in consumer sentiment.

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Business outlook㻾 㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻳㻙㻣㻌㻭㼁㼀㻻㻌㻿㻱㻾㼂㻵㻯㻱;ίŵŶͿ㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕;ίŵŶͿ㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻡㻜㻘㻜㻜㻜

㻞㻘㻡㻜㻜
㻞㻘㻜㻝㻢

㻠㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻝㻘㻣㻤㻟
㻝㻘㻡㻞㻟

㻟㻜㻘㻜㻜㻜

㻝㻘㻡㻜㻜
㻝㻘㻝㻠㻢

㻞㻜㻘㻜㻜㻜

㻝㻘㻜㻜㻜㻟㻡㻘㻟㻞㻣

㻟㻞㻘㻡㻠㻜

㻟㻞㻘㻝㻜㻤

㻟㻝㻘㻜㻞㻞
㻝㻜㻘㻜㻜㻜㻡㻜㻜㻜㻜㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜㻌㻱

Source: Prepared by FISCO from Company materials㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼕 㼚㻌㼠㼔㼑㻌㻭㼁㼀㻻㻮㻭㻯㻿㻌㼍㼚㼐㻌㼏㼍㼞㻙㼞㼑㼘㼍㼠㼑㼐㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㻔 㼅㼛㼅㻌㼓㼞㼛㼣㼠㼔㻌㼞㼍㼠㼑㻕
㻞㻜㻑

㻝㻣㻚㻡㻑

㻝㻡㻑
㻝㻜㻑

㻥㻚㻠㻑

㻡㻑

㻠㻚㻜㻑

㻙㻜㻚㻠㻑

㻜㻑

㻙㻝㻚㻥㻑

㻙㻡㻑
㻙㻝㻜㻑

㻙㻝㻜㻚㻡㻑

㻙㻝㻡㻑㻙㻝㻥㻚㻜㻑

㻙㻞㻜㻑
㻙㻞㻡㻑
㻟㻽

㻠㻽

㻝㻽

㻲㼅㻟㻛㻝㻠㻞㻽㻟㻽㻠㻽㻲㼅㻟㻛㻝㻡

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻲㼅㻟㻛㻞㻜

Source: Prepared by FISCO from Company materials

Nonetheless, there is a possibility that the impact of the recoil decline in sales will be small in magnitude, as thistime around the tax increase is only a 2%, which is smaller than the previous increase, demand for winter tires
fluctuates depending on the weather conditions in winter, and the expansion of the geographic area covered by
the December 2018 rule change requiring drivers to install tire chains is expected to result in an increase in salesof tire chains. In terms of profit, the Company’s 1H profit was approximately 50% of the full fiscal year forecast,which was much higher than expected, so the Company should be able to hit the forecast even if there is a slightdecline in sales. Moreover, the Company is planning to open two new AUTOBACS stores in 2H. One of thesestores have opened in October 2019, while the other will open in February 2020. Three stores in Chiba Prefecture
were forced to temporarily close due to the repeated typhoon landfalls in October, but they have all reopened andthe impact on results has been minimal.

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Business outlook

BIKE WORLD will continue to operate stores with an emphasis on profitability and will aim to solidify profits. In
overseas business, out of the four stores it operates in Malaysia, the Company hopes to reach profitability at one
AUTOBACS store following the achievement of profitability at BIKE WORLD. G-7 Crown Trading is broadening
its export destinations from just Southeast Asia to Africa, the United States, and other regions, with the target of
doubling sales YoY to ¥5bn, but the increase in sales is expected to remain small due to the decline in procurement
channels and other factors. However, profit margin is just 1-2%, so the negative impact on profits will be minimal.
(2) Gyomu Super and quality food businessIn the Gyomu Super and quality food business, G-7 SUPER MART, which runs Gyomu Super operations, targets
sales of ¥71,800mn (+12.1% YoY) and operating profit of ¥2,516mn (+6.7%). The business will need to havea 14% YoY increase in sales in 2H in order to achieve its target. The business posted a 10.5% YoY increase in
1H, so this will be challenging, but the aim is to achieve the forecast by opening 11 new stores in 2H. 3 stores
have already been opened in October, and another store is set to open in December. The plan is to aggressively
open stores if it can find candidate locations that meet its conditions. Profit margin is expected to decline in 2H
due to higher costs related to store openings, but there is a high possibility that sales will exceed the forecast if
existing-store sales remain strong in 2H. We think the consumption tax hike will be a boon for Gyomu Super if it
results in consumers becoming increasingly focused on low prices.
G-7 MEAT TERABAYSHI plans to open 11 stores, including store openings inside Gyomu Super stores, andtargets double-digit sales growth driven by the new store effect. 5 stores have already been opened in October (allwithin Gyomu Super stores), and the plan is to aggressively open more stores going forward. With respect to G7
JAPAN FOOD SERVICE, the aim is to rebuild the quality food business which struggled in 1H by shifting personnel
resources from the restaurant business, looking to bolster the sales structure and engineer a recovery in earnings.
(3) Other Businesses
The Company expects an increase in net sales and profit in Other businesses. In 2H, 3 new Megumi no Satostores, including joint openings with Gyomu Super, were opened, bringing the current total to 27 stores. With
the increase in the number of stores, the Company is expecting higher net sales and profit on a full fiscal year
basis. In the restaurants business, the Company plans to open five new IKINARI STEAK stores in 2H, but thecandidate sites for these stores have not been determined. In the sweets business, the Company plans to close
two BAKE stores. Elsewhere, the Company plans to open two Curves sites, which provide training and workoutclasses for women, while it plans to close one Ryohin Kaikan store in the reuse business and close one DAISO(100 yen shop) store.

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/██Medium to long-term growth strategy
Advancing M&A talks with a target of ¥170bn in net sales in FY3/21.
1. Medium-term business plan
The Company is currently working to achieve the goals of its medium-term business plan that targets ¥170bn inconsolidated net sales and ¥7bn in ordinary profit in FY3/21, which will mark the Company’s 45th anniversary. The
Company’s net sales forecast for FY3/20 is ¥140bn, so it will need to add ¥30bn. It will aim to achieve this target
by expanding existing businesses along with finalizing M&A deals that are currently being negotiated. The businessstrategy calls for evolving business models in existing businesses to meet current trends, while undertaking initiatives
that take customer convenience into consideration to increase customer traffic and spending per customer. For
openings, the Company has a basic policy of adding new stores at a pace of 30-40 stores per year at sites withattractive conditions in markets where growth is anticipated.
Looking at sales by business areas, the Company aims to increase mainstay AUTOBACS business from ¥32.5bn in
FY3/19 to ¥54.5bn. It needs an M&A deal in domestic market to reach this goal, but this seems somewhat difficult
currently and management is likely to pursue realization including peripheral businesses. In the Gyomu Super
business, the other core area, the Company hopes to boost sales from ¥64bn in FY3/19 to ¥75bn. It should bewithin range if openings proceed smoothly and might even overshoot depending on conditions. Similarly for the meatbusiness, the target of ¥10.1bn in FY3/19 to ¥12.5bn seems to be achievable. In overseas business, however, the¥4.5bn goal appears to be out of range because of the Company’s strategic reset other than in certain businesses
and the BIKE WORLD business’s goal of ¥5.0bn from ¥3.0bn in FY3/19 seems difficult to achieve as well. We think
M&A activity is a key factor in determining whether the Company attains medium-term plan goals.
Consolidated sales goals by business areas (FY3/21)

Source: Company’s website

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 17

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

G-7 HOLDINGS INC.
7508 Tokyo Stock Exchange First Section

22-Jan.-2020
http://www.g-7holdings.com/

Medium to long-term growth strategy

In M&A, the Company is considering entering new fields such as human resources services, in addition to existing
businesses and related areas. Currently, the Company’s Growth Strategy Promotion Office is searching for andscreening M&A candidates. In existing businesses, the Company is advancing talks for multiple deals involving
Gyomu Super and others, and it seems to want to wrap these up by the end of FY3/20. An issue for achieving the
medium-term business plan is securing the personnel needed to maintain the pace of opening 30-40 stores per
year. As measures to do so, the Company will accept more technical trainees from Southeast Asia, and is starting to
implement work style reforms that allow workers to select flexible working hours without being restricted to standard
working hours in order to utilize seniors who possess specialized skills (planning and development, consultants,
mechanics, inspectors, buyers, etc.). With respect to technical trainees from Southeast Asia, the Company plansto accept a few graduates from local universities each year to resolve manpower issues at stores, especially in the
AUTOBACS business.
Business strategies in the medium-term business plan

1. Strengthening organizational and human capabilities
The Company aims to integrate sentiment within the group by bolstering collaboration of people, goods, andmoney among companies and achieving growth. It wants to unify the authority structure and enhance humancapabilities through clarification of evaluation standards for individuals.
2. Creation of a growth strategy office for development of new businesses and formats
The Company intends to pursue further activities in the sweets business and other areas and develop new
businesses and formats in Japan and other countries.
3. Holding founder’s seminar and Next Cabinet training seminars
The Company’s seminars to cultivate directors and executives aimed at training the next generation of leadersarrange the founder, current directors, and external speakers to foster managerial knowhow and develop
human resources who will shoulder the group’s future.
4. Promoting M&A
The Company plans to strengthen domestic and overseas initiatives and implement investments within thebudget range.
5. Bolstering site development
The Company intends to work on openings that factor in detailed market surveys and investment efficiency
so that it is capable of adding 30-40 stores a year.
6. Reinforcing overseas business in the Asian and ASEAN region• The Company is securing human resources from Southeast Asia. It has contracts with local schools to
promote acceptance of students as technical trainees.
• These efforts aim to expand existing businesses.
7. Work style reforms
The Company wants to hire more seniors (60-80 years old) and women. It is not restricting itself to existingnormal- hour practices and introducing jobs that allow for selection of flexible working hours.
Source: Prepared by FISCO from Company materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 17

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

G-7 HOLDINGS INC.

22-Jan.-2020

7508 Tokyo Stock Exchange First Section

http://www.g-7holdings.com/

Medium to long-term growth strategy

Aiming to be "a company that can continue growing for 100 more
years" as a long-term vision
2. Long-term vision
As a long-term vision of “a company that can continue growing for 100 more years,” the Company has presented
goals for FY3/76, the 100th year of its founding, of ¥700bn in net sales and ¥30bn in ordinary income. It launched
the “founder’s seminar” in April 2018 with the aim of cultivating future executives in order to realize the vision. The“founder’s seminar” program holds seminars once a month as an educational forum on executive practices, including
experiences and views, by the founder himself for a group of 18 new presidents and directors at group subsidiaries
and other next-generation management in their 40s-50s. The Company has already switched presidents of a majorityof group companies to younger people in their 40s and intends to shift to younger executives for all group presidents
and directors by 2020. The Company plans to develop and unearth new businesses and actively promote M&A andreenter overseas business once operations are ready. It aims to grow as a global firm with operations in Asia and
ASEAN countries with high economic growth rates.

██Shareholder return policy
Sustaining dividend hikes with a 30% payout ratio goal
The Company’s dividend policy is to return profits to shareholders in accordance with business performance,
premised on maintaining stable dividends, making a comprehensive determination, while taking into consideration
factors including capital required for future business expansion and its financial condition. The Company has been
paying dividends at a payout ratio of about 30% in the past few years. We think this level is an indicator. It plans to
pay a dividend of ¥86.0 dividend (31.1% payout ratio) in FY3/20, an increase of ¥8.0 YoY for the fifth straight annual
hike. As a result, future dividend growth can also be expected if earnings continue to increase.

㻰㼕 㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍 㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕

㻝㻜㻜㻚㻜

㻟㻜㻚㻡

㻟㻜㻚㻥

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

㻟㻜㻚㻞

㻟㻝㻚㻝

㻟㻝㻚㻝

（㻑）
㻟㻡㻚㻜
㻟㻜㻚㻜

㻤㻜㻚㻜

㻞㻡㻚㻜
㻢㻜㻚㻜

㻞㻜㻚㻜

㻠㻜㻚㻜

㻣㻤㻚㻜

㻤㻢㻚㻜

㻢㻢㻚㻜
㻞㻜㻚㻜

㻠㻣㻚㻜

㻝㻡㻚㻜

㻝㻜㻚㻜

㻡㻟㻚㻜

㻡㻚㻜

㻜㻚㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻢㻌㻱

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜

Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

17 17

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp