COMPANY RESEARCH AND ANALYSIS REPORT

Kanamic Network Co., Ltd.
3939
TSE Mothers

22-Jan.-2018
FISCO Ltd. Analyst

Hideo Kakuta

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

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Business overview................................. ......................................................................................................

01

2. Results trends........................................ ......................................................................................................

01

3. Business outlook.. .................................. ......................................................................................................

01

4. Growth strategy...........................................................................................................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company overview......................................................................................................................................

03

2. History................................................... ......................................................................................................

03

3. Business composition .................................................................................................................................

04■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Business environment............................ ......................................................................................................

05

2. Cloud service: Overview........................ ......................................................................................................

05

3. Cloud service: Business model....................................................................................................................

07

4. Cloud service: Main business indicators. .....................................................................................................

08

5. Cloud service: Strengths and rivals..............................................................................................................

09

6. Overview of the content service...................................................................................................................

10■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. FY9/17 results..............................................................................................................................................

11

2. Financial conditions and management indicators. .......................................................................................

12■Future outlook--------------------------------------------------------------------------------------------------------------------------------------------------------------- 13• FY9/18 results forecast................................................................................................................................

13■Longer-term growth strategies-------------------------------------------------------------------------------------------------------------------- 14
1. Platform strategy.. ........................................................................................................................................

14

2. Child-rearing support system. . ............... ......................................................................................................

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

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██SummarySupports community-based integrated care via cloud service
with a theme of “cloud service for all stages of life”
Reported all-time high business results in FY9/17
with industry-leading 26% ordinary margin
Kanamic Network Co., Ltd. <3939> (hereafter “Kanamic” and “the Company”) provides medical, nursing care, andchild-rearing information service over the cloud. The Company’s new motto of “cloud service for all stages of life”
reflects an aim of utilizing ICT to create more vibrant support for child rearing to nursing care. Its corporate mission
is “supporting community-based integrated care via cloud service for a highly aged society.” The service provides
a platform that facilitates sharing of information that transcends divisions between medical and nursing care andcompanies and occupations within designated communities. It is a vital service for realizing community-based
integrated care promoted by the national government. Kanamic is the overwhelming industry leader in terms of thenumber of community platform installations with deployments in 616 communities*. It listed shares on the Tokyo
Stock Exchange’s Mothers market in September 2016.
* Deployed by municipalities or medical association districts

1. Business overview
Kanamic supplies cloud service, content service, and other services. The mainstay cloud service generates morethan 80% of overall sales. It consists of a two-layer structure with an “information-sharing platform” and a “caretask management system.” These layers work together mutually to support medical and nursing care collaboration
within communities. This framework incorporates efficacy and uniqueness given its development via joint researchwith the University of Tokyo and refinement in the Kashiwa model of community-based integrated care implemented
in Kashiwa, Chiba Prefecture and acquisition of a “Care assistance system and care assistance program” patent(Patent No. 4658225). The cloud service is a classic example of recurring business with steady sales build-up andvery high profitability after exceeding the breakeven point (as now).
2. Results trends
In FY9/17, Kanamic reported higher sales and profits with ¥1,291mn in net sales (+14.4% YoY), ¥330mn in operating
profit (+25.1%), ¥330mn in ordinary profit (+31.1%), and ¥223mn in profit (+35.3%). Higher sales were driven bysteady growth in the mainstay cloud service as well as a contribution from increased sales in the content service witha 26.1% YoY gain. These factors offset the sales drop in other services due to a delay in booking an administrative
consignment project. Ordinary profit rose 31.1% YoY and exceeded the initial forecast by 18.0%. Positive trends
were benefits from increased sales in the cloud service with strong profitability and a decline in the ratio of otherservices with many consignment development deals that require manpower. Ordinary margin stands out in theindustry at 25.6% (FY9/17).
3. Business outlook
The FY9/18 forecast calls for further sales and profit advances to ¥1,500mn in net sales (+16.1% YoY), ¥360mn inoperating profit (+9.0%), ¥332mn in ordinary profit (+0.4%), and ¥230mn in profit (+3.0%). In sales, the mainstay
cloud service is slated to continue growing. As for profits, Kanamic only expects slight increases in FY9/18 becauseof planned investments and spending that target growth from FY9/19.

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01 17

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

Kanamic Network Co., Ltd.

22-Jan.-2018

3939 TSE Mothers

https://www.kanamic.net/ir/

Summary

4. Growth strategy
The Company’s growth strategy targets advancement toward becoming a platformer, rather than growth as a cloudvendor. Its disclosed platform vision outlines system collaboration with AI, IoT, and other technologies as well as
collaboration with FinTech and the sharing economy. The cloud service will offer the foundation for these activities.
Collaboration with suitable partner companies is vital to these services. Examples of system collaboration with AI, IoT,
and other technologies include a care plan system and AI, remote medical care and IoT, multi-language support, anda core business system. The overall image of the role of IoT applications in nursing care is becoming more evident.
The IoT Service Creation Support Project implemented by the Ministry of Internal Affairs and Communications
is looking into ways of obtaining data from IoT devices (such as bed sensors, air conditioner sensors, and drug
management calendars) without placing any burden on the care receivers, analyzing and visualizing accumulated
big data with AI, reducing the workload of care providers and facilitating individualized service and advancement
based on these results. Kanamic hopes to offer such capabilities as a service at the core of its platform strategy.
Key Points
Supports community-based integrated care using cloud service with a theme of “cloud service for all stages oflife”• Reported all-time high business results with an industry-leading ordinary margin of 26% built on cloud service• Aims to advance from being a cloud vendor to a platformer•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟（¥㼙㼚）㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕（¥㼙㼚）㻻㼞㼐㼕㼚㼍㼞㼥㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

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Source: Prepared by FISCO from the Company’s prospectus and financial results

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02 17

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Company overview
Supports community-based integrated care using cloud service
with a theme of “cloud service for all stages of life”
1. Company overview
Kanamic supplies a medical, nursing care, and child-rearing information service over the cloud. Its name comesfrom combining “care” and “dynamic,” and the new motto of “cloud service for all stages of life” reflects an aim ofutilizing ICT to create more vibrant support for child rearing to nursing care. The Company’s corporate mission is“supporting community-based integrated care via cloud service for a highly aged society.” The service provides
a platform that facilitates sharing of information that transcends divisions between medical care and nursing careand companies and occupations within designated communities. It is a vital service for realizing community-based
integrated care promoted by the national government. President Takuma Yamamoto serves as an intermediary
between the private and public sectors with his experience as an engineer at Fujitsu Systems Solutions Limited,as a committee member at the Ministry of Internal Affairs and Communications and Ministry of Health, Labour,and Welfare and as a researcher at the University of Tokyo and National Cancer Center after joining the Company.
Kanamic is the overwhelming industry leader in terms of the number of platform installations with deployments in
616 communities. The cloud service is a classic example of recurring business with steady sales build-up and very
high profitability after exceeding the breakeven point (as now).
2. History
Kanamic was established in 2000 for the purpose of offering medical and nursing care information services. It
solidified its business foundation while developing systems that support a variety of nursing care-related needs,
including provision of a care information-sharing system in 2001, home care activity management system in 2002,
and a system for community-based integrated support centers in 2006. The Company made great strides with thelaunch of medical and nursing care information platform service in 2010. In the same year, it opened sales offices
in Osaka and Fukuoka and accelerated initiatives that cater to local communities. Kanamic listed shares on theTokyo Stock Exchange’s Mothers market in September 2016.

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

Kanamic Network Co., Ltd.

22-Jan.-2018

3939 TSE Mothers

https://www.kanamic.net/ir/

Company overview

Company overview
Year

Main events

2000

Established the company (Shinagawa, Tokyo)

2001

Started care information-sharing system service

2002

Started home care activity management system service

2006

Started system service for community-based integrated support centers

2006

Acquired a privacy mark2008

Received an HP service consignment from the Care Work Foundation

2010

Opened the Osaka and Fukuoka offices

2010

Started medical and nursing care information-sharing platform service

2011

Acquired a “Care assistance system and care assistance program” patent (Patent No. 4658225)

2012

Moved the headquarters to the current location in Shibuya, Tokyo2013

Launched Kanamic User Network user group

2014

Opened the Nagoya office2016

Listed shares on the TSE Mothers market

2016

Concluded a T-POINT program contract

2016

Received the Bayer Life Innovation Award 20162017

Confirmed as eligible for the Ministry of Economy, Trade, and Industry’s subsidies targeting IT
enhancement of productivity in services and other areas

2017

Selected as a consignment candidate related to the Ministry of Internal Affairs andCommunications’ IoT Service Creation Support Project

Source: Prepared by FISCO from Company materials

3. Business composition
Kanamic supplies cloud service, content service, and other services. The cloud service consists of the “information-sharing platform” for community collaboration that supports multi-occupation collaboration among local
municipalities, medical associations, care service providers, and others and the “care task management system”
and the “child-rearing support system.” The cloud service is the Company’s main service that generated 86.0%
of total sales (FY9/17). The content service provides an Internet advertising service with medical and nursing careinformation delivered to medical and nursing care personnel who use the cloud service and website creation service
for care service providers. While this service is still relatively small at just 4.5% of sales (FY9/17), it is growing rapidly.
Other services are related services for the cloud service, such as customization developments for major customers;
projects consigned by the Ministry of Health, Labour and Welfare, Ministry of Internal Affairs and Communications,and other entities; and consultation services for regional revitalization projects and other initiatives. It generated
9.5% of overall sales (FY9/17), but the scale varies year to year.
Services content and composition (FY9/17)
Main business content

FY9/16 sales
composition

FY9/17 sales
composition

Cloud service

Information platform with a community-based collaboration format that supports
multi-occupation collaboration among local municipalities, medical associations,and care service providers; cloud service mainly through the “care task
management system” and “child-rearing support system.”

83.0%

86.0%

Content service

Internet advertising service that supplies information related to medical andnursing care to medical and nursing care personnel using the cloud service andwebsite creation service for care service providers.

4.0%

4.5%

Other services

Services related to the cloud service, such as customization development
projects for major customers; project consignments from the Ministry of Health,Labour and Welfare, Ministry of Internal Affairs and Communications, and others;
and consultation services for regional revitalization projects.

13.0%

9.5%

Source: Prepared by FISCO from Company materials

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Business overview“Kashiwa model” information-sharing platform developedin joint research with the University of Tokyo is a strength
1. Business environment
Japan’s population pyramid faces a major threshold year in 2025 that is even being referred to as the “2025problem.” This is the year when baby boomers move past 75 years of age and the population aged 75 and older
expands to an estimated 21.79mn people, versus the 15.92mn people in this group in 2014. According to statistics,
the ratio of people requiring nursing care will rise sharply from 3% in the “65 to under 75” group to 23.3% in the“75 and older” group. Given this change, nursing care costs in national social entitlement expenses are projected
to expand from ¥10tn in 2014 to ¥20tn in 2025. Other projected increases are care service providers from about
350,000 in 2014 to about 700,000 in 2025 and medical entities engaged in home medical care from about 15,000
in 2014 to about 22,000 in 2025. Medical and care personnel are the users of Kanamic’s services, and this segment
is also likely to grow substantially going forward.
Community-based integrated care is an initiative advocated and promoted by the Ministry of Health, Labour, andWelfare. It seeks to build a framework for integrated provision of housing, medical care, nursing care, preventive care,and living assistance by 2025 so that even people with extensive care requirements can continue living with dignity ina familiar environment until the end of their lives. Municipalities are the primary players in home medical and nursing
care collaboration initiatives as stipulated by the Care Insurance Act. These initiatives begin in all municipalities in
April 2018. The Ministry of Health, Labour and Welfare lists a “productivity revolution in medical care, nursing care,and other areas (promoting use of care robots and other technologies and cutting document volume in half with apaperless format that uses ICT)” as a priority. This approach is providing a tailwind for Kanamic’s services.
2. Cloud service: Overview
The cloud service has two main modules – the “information-sharing platform” and the “care task management
system.”Customers for the “information-sharing platform” are mainly municipalities, medical associations, core hospitals,
and home care physicians. The platform is roughly deployed for an area covering a middle school district. System
screens are created for individual patients and their profile (basic information, care plan, etc.) and daily data (vitals
information, meals, water intake, toilet use, drug information, care provision, etc.) are integrated and managed.
Only related parties handling the patient can access the page, and it has closed-type SNS functionality. This service
provides an important information infrastructure that enables collaboration by various parties related to a single
patient (primary physician, home care primary physician, care manager, helper, community-based integrated support
center, family members, pharmacist, and home care nurse).

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Business overview

Information-sharing system

Source: Prepared by FISCO from the Company’s results briefing materials

The “care task management system” interacts with the “information-sharing platform” and is deployed at care-relatedcompanies and other entities (community-based integrated support center, care manager, and care service provider).
Thanks to the cloud format, it can be used at the care provision site via smartphone and tablet operations. Thissystem establishes a paper-free environment at the care site and improves task efficiency. It also reduces overlapping
input and other burdens that are an issue in collaboration involving multiple occupations. The home care service
management system, which is one of the service lines, integrates the full range of related tasks, including thehome care plan, care records, monitoring, shift management, insurance claims, salary management, and credit
management. While software products from other companies focus on individual tasks (such as form creation andreceipt management), Kanamic’s system offers broad coverage from sales force automation (SFA) to attendanceand salary management as well as business analysis and emphasizes visualization of overall business management.

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Business overview

Care task management system

Source: Prepared by FISCO from the Company’s results briefing materials

3. Cloud service: Business model
The cloud service consists of two major layers – the first layer is the “care task management system” and the second
layer is the “information-sharing platform.” These layers mutually interact and support medical and nursing carecollaboration within communities. Kanamic fundamentally utilizes a “freemium”* business model that lets customers
use the second layer (“information-sharing platform”) to experience the efficacy of collaboration and encourages
them to adopt the first layer (“care task management system”). Kanamic obtained a “Care assistance system andcare assistance program” patent (Patent No. 4658225) in 2011, giving the framework uniqueness.
* This approach supplies basic services and products at no cost and charges for advanced and special functions.

Furthermore, the cloud service is a classic example of a recurring business model with steady sales build-up.
While it requires a large initial development investment, profitability is strong after user volume growth exceeding
the breakeven point. This happens because of the high repeat ratio and limited customization per user. Kanamic isalready past the breakeven point and possesses a robust earnings structure.

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Business overview

Earnings structure in recurring business

Source: Prepared by FISCO from the Company’s results briefing materials

4. Cloud service: Main business indicators
The cloud service is rapidly spreading as seen in the 66.5% YoY rise to 616 communities deploying the information-sharing system at the end of FY9/17. Cloud service user IDs also increased 37.8% to 70,867, including paying
and non-paying IDs. Growth in non-paying users has been particularly vibrant. Given these trends, cloud service
sales expanded by a healthy 18.5% YoY to ¥1,110mn in FY9/17.
Main business indicators
FY9/15 results
Number of communities with deployments of Kanamic’s
information-sharing system

FY9/16 results

FY9/17
results

YoY (%)

202

370

616

66.5%

43,876

51,421

70,867

37.8%

Paying IDs

31,38935,47246,00229.7%

Non-paying IDs

12,487

15,94924,865

55.9%

849

937

1,110

18.5%

Number of cloud service users (total, number of IDs)

Cloud service sales (¥mn)

Source: Prepared by FISCO from the Company’s securities registration statement and results briefing materials

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Business overview

5. Cloud service: Strengths and rivals
A key strength, which prevents other companies from copying its model, is Kanamic’s development of a medical
and nursing care collaboration cloud service via joint research with the University of Tokyo’s Institute of Gerontology
and refinement through the Kashiwa model of community-based integrated care implemented in Kashiwa, Chiba
Prefecture. The Kashiwa model is a precursor in promotion of home medical care in which the administration plays
a leading role in multi-occupation collaboration among physicians, nurses, care service providers, and others.
Usage has spread to a new application in May 2017 for initial-phase intensive support for dementia. The Ministry of
Health, Labour and Welfare has outlined success cases, and this model is attracting a steady flow of observation
tours from other communities.
Joint development with the University of Tokyo (Kashiwa model)

Source: Prepared by FISCO from the Company’s results briefing materials

Kanamic is a pioneer in community information-sharing systems and holds an overwhelming No.1 share. For the“care task management system,” meanwhile, it faces numerous rivals and ND Software Co., Ltd. <3794> and others
have larger market shares. Kanamic hopes to differentiate itself with its cloud service format, “information-sharing
platform,” and visualization of the overall business by covering a wide range of business systems.

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Business overview

6. Overview of the content service
Japan’s Internet advertising market grew 13.0% YoY to ¥1.31tn in 2016. Kanamic’s content service handles Internet
advertising distribution that focuses on medical and nursing care personnel (it can be used by patients and theirfamilies as well). For companies placing advertisements, the effectiveness is clear as it is easy to pinpoint distinct
targets and regions. Besides Internet advertising, services include user group meeting participation, web questionnaires, and sample distribution. Media value is proportional to the number of user IDs (non-paying and paying
users) for the cloud service that sees advertisements. The number of user IDs were up 37.8% YoY to 70,867, andthis trend is contributing to increases in the number of advertising companies and impressions (advertisement slots).
Content service sales rose 26.1% YoY to ¥57mn in FY9/17. While its scale is still modest, this business is growing
at a fast pace.
Overview of the content service

Source: Prepared by FISCO from the Company’s results briefing materials

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Results trends
Reported all-time high business results with an industry-leading
ordinary margin of 26% built on cloud service
1. FY9/17 results
1. In FY9/17, Kanamic reported higher sales and profits with ¥1,291mn in net sales (+14.4% YoY), ¥330mn inoperating profit (+25.1%), ¥330mn in ordinary profit (+31.1%), and ¥223mn in profit (+35.3%).
Healthy expansion in the mainstay cloud service is the primary driver of sales growth. The cloud service deployment
area expanded during FY9/17 with an increase of 246 communities from the end of the previous fiscal year to 616
communities. Paid user IDs grew by 10,530 to 46,002 IDs, driving an 18.5% YoY gain in cloud service sales to¥1,110mn. Content service sales rose 26.1% YoY, contributing to higher sales. These factors offset the sales drop
in other services due to a period delay in booking an administrative consignment project.
Ordinary profit rose 31.1% YoY and exceeded the initial forecast by 18.0%. Positive trends were benefits fromincreased sales in the cloud service with strong profitability and a decline in the ratio of other services with many
consignment development deals that require manpower. Ordinary margin stands out in the industry at 25.6%(FY9/17).
FY9/17 results(¥mn)
FY9/16
Net sales

FY9/17

Results% of sales

Results% of sales

YoY

1,129

100.0%

1,291

100.0%

14.4%

120

10.7%

125

9.7%

4.5%

Gross profit margin

1,008

89.3%

1,166

90.3%

15.6%

SG&A expenses

744

66.0%

835

64.7%

12.2%

Operating profit

264

23.4%

330

25.6%

25.1%

Ordinary profit

252

22.3%

330

25.6%

31.1%

Profit

165

14.6%

223

17.3%

35.3%

Gross profit

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

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Results trends

Extremely stable financial position with low interest-bearing debt
2. Financial conditions and management indicators
On the balance sheets, Kanamic reported ¥1,298mn in net assets at the end of FY9/17, up ¥284mn YoY withincreases of ¥224mn in current assets and ¥60mn in non-current assets. Business expansion was the main factor
behind the rise in current assets, including increases of ¥169mn in cash and deposits and ¥36mn in accounts
receivable - trade.
Total liabilities increased by ¥73mn YoY to ¥342mn due to a ¥89mn rise in current liabilities and a ¥15mn decline in
non-current liabilities. Current liabilities rose due mainly to increases of ¥38mn in income taxes payable and ¥29mn
in accounts payable. Interest-bearing debt declined from ¥54mn at the end of previous fiscal year to ¥35mn.
Total net assets increased ¥211mn to ¥956mn due mainly to a ¥187mn rise in retained earnings.
Looking at management indicators, the equity ratio, which reflects longer-term stability, remained at a high levelof 73.6% and the current ratio, which depicts short-term stability, was well above 200%, the level that is generally
considered healthy, at 298.8%.
Consolidated balance sheet/Management indicator(¥mn)
FY9/16

FY9/17

ChangeCurrent assets

703

927

224

(Cash and deposits)

619

788

169

(Accounts receivable - trade)

60

96

36

Non-current assets

310

370

60

1,013

1,298

284

Current liabilities

221

310

89

Non-current liabilities

47

31

-15

Total liabilities

268

342

73

Total net assets

744

956

211

1,013

1,298

284

Current ratio (current assets ÷ current liabilities)

317.8%

298.8%-

Equity ratio (shareholders’ equity ÷ total assets)

73.5%

73.6%

-

Net assets

Total liabilities and net assets<Stability>

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

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Future outlook
Expecting higher sales and profits again in FY9/18
Profits only likely to rise slightly because of growth investments
and outlays• FY9/18 results forecast
The FY9/18 forecast calls for further sales and profit advances to ¥1,500mn in net sales (+16.1% YoY), ¥360mn inoperating profit (+9.0%), ¥332mn in ordinary profit (+0.4%), and ¥230mn in profit (+3.0%).
In sales, the mainstay cloud service is slated to continue growing. The content service is likely to realize rapid growthamid heightened media value accompanied by increases in the number of paying and non-paying user IDs.
In earnings, Kanamic only expects slight increases in FY9/18 because of planned investments and outlays targeting
growth from FY9/19. Under development activities, the Company needs to make system adjustments to accommodate planned revisions to medical and nursing care fees in spring 2018. In sales activities, Kanamic plans tosteadily open sales offices in areas that have started community-based integrated care systems, along the lines of
the Chiba sales office opened in FY9/17.
FY9/18 consolidated results forecast
FY9/17

FY9/18Result% of sales

Forecast% of sales

YoY

1,291

100.0%

1,500

100.0%

16.1%

Operating profit

330

25.6%

360

24.0%

9.0%

Ordinary profit

330

25.6%

332

22.1%

0.4%

Profit

223

17.3%

230

15.3%

3.0%

Net sales

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

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Longer-term growth strategies
Aims to advance from being a cloud vendor to a platformer
1. Platform strategy
The Company’s growth strategy targets advancement toward becoming a platformer, rather than growth as a cloudvendor. Its disclosed platform vision outlines system collaboration with AI, IoT, and other technologies as well as
collaboration with FinTech and the sharing economy based on the cloud service foundation. Collaboration withsuitable partner companies is vital to these services.
Examples of system collaboration with AI, IoT, and other technologies include a care plan system and AI, remote
medical care and IoT, multi-language support, and a core business system. Some of these concepts are alreadytaking shape. FinTech collaboration includes virtual currency, factoring, various settlements, and T-POINT. Nursing
care-related settlements present strong demand for security and reduced burden, though adoption of cashlessmethods is lagging. Sharing economy collaboration addresses staff personnel, care facilities, and care goods andvehicles. A matching function that resolves unevenness in human resources is needed in the nursing care industry,
which faces serious manpower shortages.
Platform strategy

Source: Prepared by FISCO from the Company’s results briefing materials

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Longer-term growth strategies

The overall image of the role of IoT applications in nursing care is becoming more evident. In February 2017, Kanamic
was selected as a consignment candidate related to the IoT Service Creation Support Project implemented by the
Ministry of Internal Affairs and Communications. Out of the 17 selected companies and organizations, Kanamic was
the only entity in the nursing care field. This initiative seeks to verify an operating model that delivers high-quality careservices to individual users and alleviates the burden on care staff by accumulating data from a variety of medical andnursing care sensors daily and making effective use of the data at care facilities. Specifically, it is looking into waysof obtaining data from IoT devices (such as bed sensors, air conditioner sensors, and drug management calendars)
without placing any burden on the care receivers. It will then analyze and visualize accumulated big data with AI.
Results will be utilized effectively to reduce the workload of care providers and facilitate individualized service andadvancement. The IoT Service Creation Support Project aims to build a model that promotes data utilization in an
IoT and big-data era and clarify necessary rules. We think results from this project are likely to become a standard
nationwide. Kanamic hopes to offer these capabilities as a service at the core of its platform strategy.
Additionally, Kanamic announced a business alliance with Career Co., Ltd. <6198> in September 2017. Career runs
a senior work business that promotes creation of work opportunities for active seniors and a senior care businessthat dispatches nurses, care workers, and other certified human resources. With Career, Kanamic aims to develop
a framework for rapid human resource supply to its cloud service users.
Platform IoT collaboration

Source: Prepared by FISCO from the Company’s results briefing materials

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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/

Longer-term growth strategies

2. Child-rearing support system
Child-rearing support is an important service for Kanamic with its theme of “cloud service for all stages of life.”
Accumulation of lifestyle data throughout a person’s life (life log) and health data (personal health code) should startfrom the childhood years. For example, accumulating and retaining a log of information about when a certain person
received vaccinations provides value for the individual and society. Kanamic’s “child-rearing support system” currently
has a role in the regional revitalization project framework and handles information distribution from municipalities
to parents, child blogs that extend the electronic mother and child health handbook, and SNS for the mothers’
network. As a specific example, Fuefuki, Yamanashi Prefecture introduced the official Fuefuki Child-Rearing Plaza
app that utilizes the “child-rearing support system” from Kanamic in June 2017. It includes a consulting function forrequests to administrative personnel and medical and childcare specialists and a growth record function (electronic
mother and child health handbook) to record and share child height, weight, and other growth graphs, daily living
activities such as meals and sleep, and photos.
Child-rearing support system

Source: Prepared by FISCO from the Company’s results briefing 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

Kanamic Network Co., Ltd.
3939 TSE Mothers

22-Jan.-2018https://www.kanamic.net/ir/██Shareholder return policy
Plans to pay a ¥5 dividend in FY9/18 (unchanged YoY),
putting the payout ratio at 17.4%
Kanamic positions returning profits to shareholders as one of its priorities and is currently at a stage of strengthening
internal reserves and aggressively developing business to realize long-term shareholder returns. In FY9/17, Kanamic
paid a dividend of ¥5 per share that worked out to a payout ratio of 17.7%. It plans to pay a ¥5 dividend in FY9/18
too (unchanged YoY), putting the payout ratio at 17.4%.

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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
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