Aeon Delight / 9787
COVERAGE INITIATED ON:

2013.06.06

LAST UPDATE:

2021.07.07

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is toprovide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
always present opinions from company management as such. Our views are ours where stated. We do not try toconvince or influence, only inform. We appreciate your suggestions and feedback. Write to us at
sr_inquiries@sharedresearch.jp or find us on Bloomberg.

Research Coverage Report by Shared Research Inc.

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.

Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3
Key financial indicators ------------------------------------------------------------------------------------------------------------------------------ 5
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 6
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------6
Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 7
Quarterly trends and results -----------------------------------------------------------------------------------------------------------------------------------7
FY02/22 company forecast ----------------------------------------------------------------------------------------------------------------------------------- 11
Medium- and long-term outlook -------------------------------------------------------------------------------------------------------------------------------- 14
Aeon Delight Vision 2025 ------------------------------------------------------------------------------------------------------------------------------------ 14
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 18
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 18
Business overview ----------------------------------------------------------------------------------------------------------------------------------------------- 19
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 24
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 25
Financial Statements ------------------------------------------------------------------------------------------------------------------------------- 28
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 28
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 29
Statement of cash flows --------------------------------------------------------------------------------------------------------------------------------------- 31
ROE and dividends---------------------------------------------------------------------------------------------------------------------------------------------- 32
Other information ---------------------------------------------------------------------------------------------------------------------------------- 34
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 34
Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 34
Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 35
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 35
Investor relations ------------------------------------------------------------------------------------------------------------------------------------------------ 36
By the way --------------------------------------------------------------------------------------------------------------------------------------------------------- 36
Historical financial statements and news ---------------------------------------------------------------------------------------------------- 38
Historical financial statements ------------------------------------------------------------------------------------------------------------------------------- 38
News & topics ---------------------------------------------------------------------------------------------------------------------------------------------------- 49
Company profile ------------------------------------------------------------------------------------------------------------------------------------- 51

02/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Executive summary◤ Aeon Delight mainly operates facilities management services for large commercial facilities and is the largest facilities

management company in Japan. The company also provides services for integrated facilities management and ancillary workthat is non-core for the customer. This streamlines overall facility costs and generates rationalization benefits for the customer.
Its reporting segments are Facilities Management, Security Services, Cleaning Services, Construction Work, Materials andSupplies Sourcing Services, Vending Machine Services, and Support Services. Aeon Delight, owned more than 50% by the
Aeon group, is a major group company, deriving 64% of its sales in FY02/21 from transactions within the group.
◤ Breaking down FY02/21 sales and operating profit by segment, Cleaning Services accounted for 20.8% and 32.2%

respectively, Facilities Management 19.4% and 22.8%, Materials and Supplies Sourcing Services 17.7% and 10.9%, Security
Services 14.8% and 14.5%, Construction Work 13.5% and 17.1%, Vending Machine Services 8.5% and 2.9%, and Support
Services/other 5.3% and operating loss. Customers from outside the Aeon group include commercial facilities, officebuildings and offices, hotels and accommodation facilities, medical and welfare facilities, education facilities, factories andworkshops, warehouses and distribution centers, public facilities, and events. The company operates a recurring revenue
business model. Contracts typically last for one year and are usually renewed, maintaining low cancellation rates.
◤ Most of the company’s overseas operations are in China and ASEAN, and all overseas operations together accounted for 6.7%of sales in FY02/21. In recent years, the company has been using a three-pronged growth strategy that addresses safety andsecurity, manpower shortage, and the environment, and aims to expand its contracted facilities management services
throughout the Asian region. In China, the strategy is to provide quality facilities management centered on Central and South
China to boost the Aeon Delight brand profile.
◤ In late March 2019, signs of accounting irregularities emerged at subsidiary Kajitaku. Aeon Delight established a special

investigation committee comprised of independent outside experts, which subsequently confirmed the findings of fraudulent
accounting. In response, the company restated prior year earnings (a total of JPY16.3bn over FY02/14–FY0219) and put inplace measures to prevent a recurrence in the future.

Trends and outlook◤ In FY02/21, sales were JPY300.1bn (-2.8% YoY), operating profit was JPY15.2bn (-4.8% YoY), and net income was JPY11.7bn(+24.9% YoY). The partial closure or temporary shutdown of facilities, cancelations of events and people refraining from goingout because of the pandemic all severely affected performance especially in 1H, and full-year sales and operating profit failed
to match the record highs of the previous year. However, net income was at record levels due to a reduction in tax. The
infrastructure for the next stage of growth has been put in place with the introduction of “new standard cleaning” based oncleaning standards for the with-COVID era, area management to aid labor-saving and unmanned management of facilities,
and organizational restructuring to improve management efficiency (such as streamlining and integration of subsidiaries). The
annual dividend was JPY82.0 per share (dividend payout ratio 35.1%).
◤ The company’s forecast for FY02/22 is sales of JPY325.0bn (+8.3% YoY), operating profit of JPY16.5bn (+8.3% YoY) and net

income of JPY10.5bn (-10.1% YoY). The EPS forecast is JPY210.0 and the annual dividend forecast is JPY84.0 per share(including commemoration dividend of JPY10 per share). Sales and operating profit are expected to reach record highs: thenegative impact of COVID-19 on operating profit is expected to fall to JPY500mn from JPY1.5bn in the previous year, and sales
are expected to benefit from initiatives to secure new customers, as well as boost revenue from existing customers, andmeasures to improve profitability.
◤ The company released its Aeon Delight Vision 2025 plan. This aims to make Aeon Delight a company that createsenvironmental value and contributes to solving social issues, with a three-pronged growth strategy in Asia that addresses
safety and security, manpower shortage, and the environment. The company targets sales of JPY471.0bn, operating profit of
JPY37.0bn, and ROE of 15% in FY02/26. It aims to raise the dividend payout ratio to the 40% level by FY02/24.
◤ In April 2021, the company formulated a medium-term plan covering the next three years (FY02/22–FY02/24) as it moves

toward achieving the goals of Aeon Delight Vision 2025. The medium-term plan targets FY02/24 sales of JPY361.0bn (CAGR of
6.4%), operating profit of JPY22.0bn (CAGR of 13.0%), and net income of JPY14.0bn. By FY02/24, the company aims to
03/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

increase sales within the Aeon group by JPY25.0bn versus FY02/21 to approximately JPY220.0bn (60% of total sales, -5pp
versus FY02/21), while growing sales outside the Aeon group by JPY35.0bn to about JPY140.0bn (40% of total sales, +5pp
versus FY02/21) and raising OPM to 6.0% (+0.9pp versus FY02/21). As detailed hereinafter, it aims to achieve this sales
growth and OPM improvement by putting customer-oriented group management into practice and promoting digitaltransformation (DX).

Strengths and weaknesses
Shared Research believes the company’s strengths are 1) strong ties with the Aeon group, 2) industry leader in facilities
management, and 3) the ability to generate stable cash flows. Weaknesses include its 1) limited organic growth, 2) heavy
dependence on the Aeon group, and 3) mature property management market (see Strengths and weaknesses section for
details).

04/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Key financial indicators
Income statement(JPYmn)Sales

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21 FY02/22
Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Est.

219,797 248,876 256,654 265,572 277,926 292,607 292,396 302,915 308,582 300,085 325,000

YoY

28.6%

13.2%

3.1%

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

Gross profit

28,63130,22733,24534,29034,83635,73634,87135,452

38,57037,175

19.4%
13.0%

5.6%
12.1%

10.0%
13.0%

3.1%
12.9%

1.6%
12.5%

2.6%
12.2%

-2.4%
11.9%

1.7%
11.7%

8.8%
12.5%

-3.6%
12.4%

13,762

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,23016,500

14.4%
6.3%

1.0%
5.6%

5.2%
5.7%

5.3%
5.8%

-5.4%
5.2%

-2.9%
4.8%

-8.7%
4.4%

0.9%
4.3%

22.8%
5.2%

-4.8%
5.1%

8.3%
5.1%

13,784

13,892

14,60015,472

14,534

14,263

13,381

13,362

15,94915,26816,500

14.0%
6.3%

0.8%
5.6%

5.1%
5.7%

6.0%
5.8%

-6.1%
5.2%

-1.9%
4.9%

-6.2%
4.6%

-0.1%
4.4%

19.4%
5.2%

-4.3%
5.1%

8.1%
5.1%

6,912

7,509

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,68010,500

6.4%
3.1%

8.6%
3.0%

-6.3%
2.7%

13.2%
3.0%

-9.0%
2.6%

-2.1%
2.4%

-9.8%
2.2%

0.3%
2.1%

45.7%
3.0%

24.9%
3.9%

-10.1%
3.2%

54,170
131.8
131.5
40
1,096

54,170
143.2
142.7
46
1,202

54,170
134.2
133.8
48
1,303

54,170
151.7
151.3
50
1,400

54,170
138.0
137.6
52
1,471

54,170
135.0
134.6
55
1,559

54,170
121.7
121.3
61
1,637

54,170
122.9
122.6
63
1,466

54,170
187.2
186.9
65
1,579

54,170
233.7
233.5
82
1,747

62,35559,773YoY
Gross profit margin

Operating profit
YoY
Operating profit margin

Recurring profit
YoY
Recurring profit margin

Net income
YoY
Net margin

8.3%

Per-share data (JPY)

Shares issued (year-end; '000)
EPS
EPS (fully diluted)
Dividend per share
Book value per share

210.0
84

Balance sheet (JPYmn)

Cash and cash equivalents
Total current assets
Tangible fixed assets
Investments and other assets
Intangible fixed assets
Total assets
Accounts payable
Short-term debt
Total current liabilities
Long-term debt
Total fixed liabilities
Total liabilities
Total net assets

9,707
10,014
12,565
15,58020,386
31,71739,536 44,233
72,486 79,323 89,914 103,634 104,190 111,098 118,311 108,771
3,773
3,796
4,258
4,361
7,061
9,064
10,041 10,161
7,578
4,276
5,257
5,829
6,268
8,176
8,904
8,512
8,103
12,272
12,321
11,008
10,32010,006
8,802
7,813
92,809 100,699 111,010 124,584 129,434 137,870 144,678 134,614
23,72024,544
21,87624,93428,457
25,11425,820 25,967
394
41
10
5
271
225
33,643 34,955 39,309 46,639 45,834 47,051 49,060 51,408
15
15
5
293
7,667
983
1,195
1,556
2,387
3,925
6,214
6,474
34,626 36,151 40,865 49,026 49,760 53,266 55,535 59,075
58,182 64,547 70,145 75,558 79,674 84,604 89,143 75,539

112,362 110,008

9,671
7,698
7,185

9,481
11,557
5,518

136,917 136,565

23,388 22,170
252
299
48,864 44,123
11
6,767
4,160
55,631 48,283
81,286 88,281

Cash flow statement (JPYmn)

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Financial ratios
Total interest-bearing debt
Net cash
ROA (RP-based)
ROE
Equity ratio

9,639-10,051-2,722-4,3587,086-2,257

21,359-16,632-2,475

17,234-11,365-2,594

10,303-3,255-2,821

11,7032,233-2,40013,568 12,373-2,666 12,256-3,264 -19,686

7,371
13,838-3,392

10,403-7,325-5,32456
36,971
15.5%
12.5%
61.9%

15
28,019
14.4%
12.5%
62.6%

5
44,980
13.8%
10.7%
61.6%

56,906
13.1%
11.2%
59.0%

57,748
11.4%
9.6%
59.7%

564
62,866
10.7%
8.9%
59.4%

225
71,311
9.5%
7.6%
59.5%

409
59,824
9.6%
8.1%
54.4%

263
62,092
11.7%
12.3%
57.6%

299
59,474
11.2%
14.1%
64.0%

Source: Shared Research based on company data

05/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Recent updates
Highlights
On July 7, 2021, Aeon Delight Co., Ltd. announced earnings results for Q1 FY02/22; see the results section for details.

On April 26, 2021, Shared Research updated the report following interviews with the company.

On April 9, 2021, the company announced earnings results for full-year FY02/21.

For previous releases and developments, please refer to the News and topics section.

06/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Trends and outlook
Quarterly trends and results
FY02/20

Cumulative(JPYmn)Sales

Q1
79,048Q2
157,482

FY02/21Q3
232,643Q4
308,582

Q1
73,532Q2149,734

FY02/22Q3
224,398Q4
300,085Q1
79,688

YoY

3.5%

3.2%

2.6%

1.9%

-7.0%

-4.9%

-3.5%

-2.8%

8.4%

Gross profit

9,632

19,76329,014

38,5708,963

18,23927,561

37,175

9,765

3.1%
12.2%

13.2%
12.5%

12.3%
12.5%

8.8%
12.5%

-6.9%
12.2%

-7.7%
12.2%

-5.0%
12.3%

-3.6%
12.4%

8.9%
12.3%

SG&A expenses

5,832

11,16816,90922,5695,507

10,73816,347

21,945

6,036

YoY
SG&A ratio

5.0%
7.4%

-0.2%
7.1%

-0.1%
7.3%

0.7%
7.3%

-5.6%
7.5%

-3.9%
7.2%

-3.3%
7.3%

-2.8%
7.3%

9.6%
7.6%

Operating profit

3,800

8,594

12,10416,001

3,455

7,500

11,214

15,230

3,728

0.4%
4.8%

37.0%
5.5%

35.8%
5.2%

22.8%
5.2%

-9.1%
4.7%

-12.7%
5.0%

-7.4%
5.0%

-4.8%
5.1%

7.9%
4.7%

3,822

8,655

12,18915,949

3,459

7,496

11,245

15,268

3,751

0.2%
4.8%

36.3%
5.5%

31.0%
5.2%

19.4%
5.2%

-9.5%
4.7%

-13.4%
5.0%

-7.7%
5.0%

-4.3%
5.1%

8.4%
4.7%

2,070

5,181

7,369

9,348

2,991

3,943

6,326

11,680

2,507

0.1%
2.6%

82.6%
3.3%

89.3%
3.2%

45.7%
3.0%

44.5%
4.1%

-23.9%
2.6%-14.2%
2.8%

24.9%
3.9%

-16.2%
3.1%

Q475,939Q1
73,532Q475,687Q1
79,688YoY
Gross profit margin

YoY
Operating profit margin

Recurring profit
YoY
Recurring profit margin

Net income
YoY
Net margin

FY02/20

Quarterly(JPYmn)Sales

Q1
79,048Q2
78,434

FY02/21Q3
75,161Q2
76,202

YoY

3.5%

2.9%

1.4%

-0.3%

-7.0%

-2.8%

-0.7%

-0.3%

8.4%

9,632

10,131

9,251

9,556

8,963

9,276

9,322

9,614

9,765

3.1%
12.2%

24.8%
12.9%

10.4%
12.3%

-0.6%
12.6%

-6.9%
12.2%

-8.4%
12.2%

0.8%
12.5%

0.6%
12.7%

8.9%
12.3%

SG&A expenses

5,832

5,336

5,741

5,660

5,507

5,231

5,609

5,598

6,036

YoY
SG&A ratio

5.0%
7.4%

-5.2%
6.8%

7.6%

3.0%
7.5%

-5.6%
7.5%

-2.0%
6.9%

-2.3%
7.5%

-1.1%
7.4%

9.6%
7.6%

Operating profit

3,800

4,794

3,510

3,897

3,455

4,045

3,714

4,016

3,728

0.4%
4.8%

92.5%
6.1%

33.1%
4.7%

-5.3%
5.1%

-9.1%
4.7%

-15.6%
5.3%

5.8%
5.0%

3.1%
5.3%

7.9%
4.7%

3,822

4,833

3,534

3,760

3,459

4,037

3,749

4,023

3,751

0.2%
4.8%

90.8%
6.2%

19.5%
4.7%

-7.3%
5.0%

-9.5%
4.7%

-16.5%
5.3%

6.1%
5.0%

7.0%
5.3%

8.4%
4.7%

YoY
Operating profit margin

Recurring profit
YoY
Recurring profit margin

Net income
YoY
Net margin

FY02/22
Q3
-

-

-

-

-

-

-

-

-

-

-

22.6%
-

-

-

8.3%

-

-

-

FY Est.
325,000

-

-

-

24.5%

-

-

-

% of Est.

-

-

-

Q4
-

8.3%
5.1%
22.7%

16,50023.9%

10,500

-

-

-

Q3
-

Q4
-

16,500

8.1%
5.1%-10.1%
3.2%

FY02/22Q3
74,664Gross profit
YoY
Gross profit margin

Q2
-

2,070

3,111

2,188

1,979

2,991

952

2,383

5,354

2,507

0.1%
2.6%

303.5%
4.0%

107.4%
2.9%-21.5%
2.6%

44.5%
4.1%

-69.4%
1.2%

8.9%
3.2%

170.5%
7.1%-16.2%
3.1%

Q2
-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Source: Shared Research based on company data

07/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

FY02/20

Segments
Cumulative (JPYmn)

Sales
YoY

Facilities Management
YoY

Security Services
YoY

Cleaning Services
YoY

Construction WorkYoY
Materials and Supplies Sourcing

YoY

Vending Machine Services
YoY

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Q1
79,048Q2
157,482

FY02/21Q3
232,643Q4
308,582

Q1
73,532Q2149,734

FY02/22Q3
224,398Q4
300,085Q1
79,688

3.5%

3.2%

2.6%

1.9%

-7.0%

-4.9%

-3.5%

-2.8%

8.4%

14,92829,62844,25958,28914,511

29,086

43,831

58,223

15,507

5.9%

5.4%

4.0%

3.4%

-2.8%

-1.8%

-1.0%

-0.1%

6.9%

11,14322,18333,30444,647

10,843

21,69532,96644,393

11,638

0.6%

0.5%

0.1%

0.3%

-2.7%

-2.2%

-1.0%

-0.6%

7.3%

15,40130,92846,52762,362

15,00830,42746,08562,45916,568

8.1%

8.0%

8.0%

7.2%

-2.6%

-1.6%

-0.9%

0.2%

10.4%

12,014

23,10332,024

41,844

11,52322,12031,02640,657

11,205

14.4%

6.6%

3.4%

0.9%

-4.1%

-4.3%

-3.1%

-2.8%

-2.8%

12,98725,91338,554

51,125

12,957

26,60939,64653,06014,126

0.6%

-0.4%

-0.6%

0.2%

-0.2%

2.7%

2.8%

3.8%

9.0%

7,699

16,07523,76031,544

4,725

12,054

19,05725,453

6,529

-5.0%

-1.9%

-1.0%

-1.3%

-38.6%-25.0%-19.8%-19.3%

38.2%

4,872

9,647

14,211

18,768

3,963

7,739

11,784

15,8374,113

YoY-10.3%

-0.6%

1.2%

-3.5%

-18.7%-19.8%-17.1%-15.6%

3.8%

Other
Operating profit

3,800

8,594

12,10416,001

5,417

7,500

11,214

15,2306,007

YoY
Operating profit margin

0.4%
4.8%

37.0%
5.5%

35.8%
5.2%

22.8%
5.2%

42.6%
7.4%

-12.7%
5.0%

-7.4%
5.0%

-4.8%
5.1%

10.9%
7.5%

Facilities Management

1,433

2,789

4,039

5,293

1,256

2,549

3,916

5,175

1,275

-3.0%
9.6%

-0.8%
9.4%

-5.0%
9.1%

-4.8%
9.1%

-12.4%
8.7%

-8.6%
8.8%

-3.0%
8.9%

-2.2%
8.9%

1.5%
8.2%

Support Services

YoY
Operating profit margin

Security Services
YoY
Operating profit margin

Cleaning Services
YoY
Operating profit margin

Construction Work

730

1,412

2,207

3,038

763

1,594

2,387

3,307

796

1.1%
6.6%

0.6%
6.4%

4.2%
6.6%

5.4%
6.8%

4.5%
7.0%

12.9%
7.3%

8.2%
7.2%

8.9%
7.4%

4.3%
6.8%

1,724

3,510

5,291

6,967

1,646

3,430

5,340

7,324

1,974

2.4%
11.2%

6.2%
11.3%

5.8%
11.4%

4.1%
11.2%

-4.5%
11.0%

-2.3%
11.3%

0.9%
11.6%

5.1%
11.7%

19.9%
11.9%

1,094

2,174

2,843

3,816

1,139

2,081

2,879

3,880

1,067

YoY
Operating profit margin

10.6%
9.1%

7.8%
9.4%

-1.3%
8.9%

-4.3%
9.1%

4.1%
9.9%

-4.3%
9.4%

1.3%
9.3%

1.7%
9.5%

-6.3%
9.5%

Materials and Supplies Sourcing

712

1,355

1,946

2,489

612

1,284

1,851

2,467

656

YoY
Operating profit margin

-4.2%
5.5%

-9.4%
5.2%

-8.9%
5.0%

-10.4%
4.9%-14.0%
4.7%

-5.2%
4.8%

-4.9%
4.7%

-0.9%
4.6%

7.2%
4.6%

Vending Machine Services

256

705

948

1,396

-10

357

563

653

116

YoY
Operating profit margin-38.9%
3.3%

32.3%
4.4%

24.1%
4.0%

19.9%
4.4%

-0.2%

-49.4%
3.0%-40.6%
3.0%-53.2%
2.6%

1.8%

Support Services

-124

254

441

416

8

-100

-171

-75

119

YoY
Operating profit margin
Segments

-2.5%

2.6%

3.1%

2.2%

0.2%

-1.3%

-1.5%

-0.5%

2.9%

Quarterly (JPYmn)

Q1
79,048Q3
75,161Q475,939Q1
73,532

Q3
74,664Q475,687Q1
79,688Sales
YoY

Facilities Management
YoY

Security Services
YoY

Cleaning Services
YoY

Construction WorkYoY
Materials and Supplies Sourcing

YoY

Vending Machine Services
YoY

Support Services
YoY

Other
Operating profit

FY02/20Q2
78,434

FY02/21Q2
76,202

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Q2
-

Q3
-

Q4
-

-0.3%

-7.0%

-2.8%

-0.7%

-0.3%

8.4%

-

-

-

14,511

14,575

14,745

14,392

15,507

-

-

-

5.9%

4.9%

1.3%

1.7%

-2.8%

-0.9%

0.8%

2.6%

6.9%

-

-

-

11,143

11,04011,121

11,343

10,843

10,852

11,271

11,427

11,638

-

-

-

0.6%

0.4%

-0.9%

1.2%

-2.7%

-1.7%

1.3%

0.7%

7.3%

-

-

-

15,401

15,527

15,59915,83515,00815,41915,65816,374

16,568

-

-

-

8.1%

7.9%

7.9%

4.9%

-2.6%

-0.7%

0.4%

3.4%

10.4%

-

-

-

12,014

11,089

8,921

9,820

11,523

10,597

8,906

9,631

11,205

-

-

-

14.4%

-0.8%

-3.9%

-6.5%

-4.1%

-4.4%

-0.2%

-1.9%

-2.8%

-

-

-

12,987

12,926

12,641

12,571

12,957

13,652

13,037

13,414

14,126

-

-

-

0.6%

-1.4%

-1.0%

2.8%

-0.2%

5.6%

3.1%

6.7%

9.0%

-

-

-

7,699

8,376

7,685

7,784

4,725

7,329

7,003

6,396

6,529

-

-

-

-5.0%

1.1%

0.9%

-2.1%

-38.6%-12.5%-8.9%-17.8%

38.2%

-

-

-

4,872

4,775

4,564

4,557

3,963

3,776

4,045

4,053

4,113

-

-

-

-10.3%
-

11.7%
-

5.1%
-

-15.5%--18.7%--20.9%--11.4%--11.1%
-

3.8%
-

-

-

-

5,417

2,083

3,714

4,016

6,007

-5.3%
5.1%

42.6%
7.4%

-56.5%
2.7%

5.8%
5.0%

3.1%
5.3%

10.9%
7.5%

Facilities Management

1,433

1,356

1,250

1,254

1,256

1,293

1,367

1,259

1,275

-3.0%
9.6%

1.6%
9.2%

-13.1%
8.5%

-4.1%
8.9%

-12.4%
8.7%

-4.6%
8.9%

9.4%
9.3%

0.4%
8.7%

1.5%
8.2%

730

682

795

831

763

831

793

920

796

1.1%
6.6%

0.1%
6.2%

11.0%
7.1%

9.1%
7.3%

4.5%
7.0%

21.8%
7.7%

-0.3%
7.0%

10.7%
8.1%

4.3%
6.8%

1,724

1,786

1,781

1,676

1,646

1,784

1,910

1,984

1,974

2.4%
11.2%

10.1%
11.5%

5.1%
11.4%

-1.1%
10.6%

-4.5%
11.0%

-0.1%
11.6%

7.2%
12.2%

18.4%
12.1%

19.9%
11.9%

1,094

1,080

669

973

1,139

942

798

1,001

1,067

10.6%
9.1%

5.2%
9.7%

-22.7%
7.5%-12.2%
9.9%

4.1%
9.9%

-12.8%
8.9%

19.3%
9.0%

2.9%
10.4%

-6.3%
9.5%

Materials and Supplies Sourcing

712

643

591

543

612

672

567

616

656

YoY
Operating profit margin

-4.2%
5.5%

-14.5%
5.0%

-7.8%
4.7%

-15.6%
4.3%-14.0%
4.7%

4.5%
4.9%

-4.1%
4.3%

13.4%
4.6%

7.2%
4.6%

Vending Machine Services

256

449

243

448

-10

367

206

90

116

YoY
Operating profit margin-38.9%
3.3%

293.9%
5.4%

5.2%
3.2%

12.0%
5.8%

-0.2%

-18.3%
5.0%-15.2%
2.9%-79.9%
1.4%

1.8%

-124

378

187

-25

8

-108

-71

96

119

-2.5%

7.9%

4.1%

-0.5%

0.2%

-2.9%

-1.8%

2.4%

1,387.5%
2.9%

YoY
Operating profit margin

-

-

-

-

14,0303,897

Support Services

-

-

1.4%

3,510

YoY
Operating profit margin

-

-

-

-

14,631

33.1%
4.7%

Construction Work

-

-

2.9%

4,794

YoY
Operating profit margin

-

-

-

-

14,700

92.5%
6.1%

Cleaning Services

-

-

3.5%

0.4%
4.8%

YoY
Operating profit margin

-

-

Q4
-

14,9283,800

Security Services

Q3-

FY02/22

YoY
Operating profit margin
YoY
Operating profit margin

Q2
-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Source: Shared Research based on company data

08/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Q1 FY02/22 results (out July 7, 2021)
Summary▷ Sales:

JPY79.7bn (+8.4% YoY)

▷ Operating profit:

JPY3.7bn (+7.9% YoY)

▷ Recurring profit:

JPY3.8bn (+8.4% YoY)

▷ Net income:

JPY2.5bn (-16.2% YoY)

Segment trends
Except for the Construction Work segment, sales and profit improved YoY in each of the company’s segments. Performance washelped in particular by favorable growth in the Cleaning Services segment.

Facilities Management
Sales improved 6.9% YoY to JPY15.5bn while operating profit expanded 1.5% YoY to JPY1.3bn.
Sales and profit in the segment improved as an increase in orders for a variety of maintenance services led to an expanded market
share in existing customers. The company promoted area management in line with the need to reform work processes.

Security Services
Sales improved 7.3% YoY to JPY11.6bn while operating profit expanded 4.3% YoY to JPY796mn.
Sales and profit improved YoY amid a recovery in demand in Japan and the overseas markets. Profitability improved as a result of
ongoing initiatives to optimize unit prices through price negotiations and progress in automating systems to handle routine tasks
such as facility entry/exit management and store closings.

Cleaning Services
Sales improved 10.4% YoY to JPY16.6bn while operating profit expanded 19.9% YoY to JPY2.0bn.
Sales and profit improved as demand in Japan and overseas recovered amid the expanded implementation of “new standard
cleaning” and preventative cleaning using alcohol in line with efforts to prevent the further spread of COVID-19.

Construction Work
Sales declined 2.8% YoY to JPY11.2bn while operating profit deteriorated 6.3% YoY to JPY1.1bn.
Although there was an increase in construction work contracts, sales and profit declined YoY on the delayed start of someprojects due to the COVID-19 pandemic.

Materials and Supplies Sourcing Services
Sales improved 9.0% YoY to JPY14.1bn while operating profit expanded 7.2% YoY to JPY656mn.
Sales and profit increased on the continued provision of quarantine-related materials such as masks, gloves, alcohol for
professional use, and acrylic partitions to prevent droplet spread. The segment continued to focus on expanding its market sharewithin the Aeon group.

Vending Machine Services
Sales improved 38.2% YoY to JPY6.5bn while operating profit was JPY116mn (versus a loss of JPY10mn in Q1 FY02/20).
Demand a year ago slumped on the closure of facilities and people refraining from going out in the wake of the government’s
declaration of a state of emergency, but a recovery in demand resulted in sales and profit improving YoY in Q1 FY02/21. The
09/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

company installed more of its own multi-brand vending machines (which offer products from several different brands) toimprove profitability per unit.

Support Services
Sales improved 3.8% YoY to JPY4.1bn while operating profit expanded 1,387.5% YoY to JPY119mn.
Sales and profit improved as the company worked to expand the provision of a variety of services in order to meet outsourcing
needs related to the management and operation of contracted facilities and their surroundings.

Summary of measures for FY02/21▷

In March 2021, the integration of A to Z Service Co., Ltd., a construction and maintenance provider for mainly Kanto-area small
and medium facilities, and Do Service Co., Ltd., a cleaning services provider for mainly Kansai-area small and medium facilities,
resulted in the birth of Aeon Delight Connect Co., Ltd. The new company is set to become a core company within the groupthat can provide comprehensive management services for small and medium-sized facilities throughout Japan.

▷

In China, Aeon Delight Jiangsu and Wuhan Xiaozhu Property Management expanded their businesses by focusing on
bolstering contracts for priority facilities such as medium- to high-end shopping centers, hospitals and nursing homes, andfacilities in areas undergoing redevelopment. In April 2021, the company established Aeon Delight China (AD China) in
Suzhou to oversee its operations in China as part of its effort to strengthen group governance, maximize synergy among its
operating companies, and firmly establish the company brand in the country.

▷

Amid the ongoing spread of COVID-19 in the region, the company continued to face a tough operating environment in the
ASEAN community, with shorter operating hours, partial closures and idling of facilities, and curfews in effect in the countries
where the company operates, including Malaysia, which enacted travel and movement restrictions from January 2021.

For details on previous results, please refer to the Historical financial statements section.

10/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

FY02/22 company forecast
Full-year company forecast(JPYmn)Sales
YoY
Cost of sales
Gross profit
YoY
Gross profit margin
SG&A expenses
SG&A ratio
Operating profit
YoY
Operating profit margin
Recurring profit
YoY
Recurring profit margin
Net income
YoY

1H Act.
157,482
3.2%
137,719
19,763
13.2%
12.5%
11,168
-0.2%
8,594
37.0%
5.5%
8,655
36.3%
5.5%
5,181
82.6%

FY02/20
2H Act.
151,100
0.5%
132,292
18,8074.5%
12.4%
11,401
1.5%
7,407
9.7%
4.9%
7,294
4.0%
4.8%
4,167
16.5%

FY Act.
308,5821.9%
270,01138,5708.8%
12.5%
22,5690.7%
16,001
22.8%
5.2%
15,949
19.4%
5.2%
9,348
45.7%

1H Act.
149,734-4.9%
131,494
18,239-7.7%
12.2%
10,738-3.9%
7,500-12.7%
5.0%
7,496-13.4%
5.0%
3,943-23.9%

FY02/212H Act.
150,351-0.5%
131,416
18,9360.7%
12.6%
11,207
-1.7%
7,730
4.4%
5.1%
7,772
6.6%
5.2%
7,737
85.7%

FY Act.
300,085-2.8%
262,910
37,175-3.6%
12.4%
21,945-2.8%
15,230-4.8%
5.1%
15,268-4.3%
5.1%
11,68024.9%

FY02/22FY Est.
325,000
8.3%

16,500
8.3%
5.1%
16,5008.1%
5.1%
10,500-10.1%

Source: Shared Research based on company data

The FY02/22 company forecast calls for sales of JPY325.0bn (+8.3% YoY), operating profit of JPY16.5bn (+8.3% YoY), net incomeof JPY10.5bn (-10.1% YoY), and EPS of JPY209.99. The company expects the impact of the COVID-19 pandemic to ease and aims
to boost sales by increasing orders from outside the Aeon group.
The company expects a JPY1.3bn YoY rise in operating profit, mainly due to shrinking negative factors. It expects the pandemic tohave a negative operating profit impact of JPY500mn (versus JPY1.5bn in FY02/21) and the old Kajitaku to generate loss of
JPY300mn (versus loss of JPY1.0bn in FY02/21). On the other hand, it anticipates higher expenses related to head office relocationand human resource development, along with amortization of investments related to the promotion of digital transformation.
The projected full-year dividend is JPY84 per share (versus JPY82 per share in FY02/21).
Aeon Delight had previously set its payout ratio at 30%, but raised that to 35% in FY02/21, and is targeting 40% during its
current three-year plan (FY02/22–FY02/24).

Enhanced sales structure
The company reformed its sales structure in November 2020 with the aim of expanding transactions with companies outside the
Aeon group. It will establish a department for developing new customers, targeting major domestic companies to efficiently
capture new customers. Also, instead of continuing to communicate with existing customers on a divisional basis, it plans toimprove customer satisfaction and expand transactions by assigning account managers to key customers and centrally managing
customer information. With the aim of expanding its market share, it plans to propose services from multiple departments insingle packages (for example, construction needed in the Facilities Management business would be handled by the Construction
Work business) and stable, quality services on a nationwide scale to customers who operate nationwide.

Reorganization within group
In March 2021, the integration of A to Z Service Co., Ltd. (construction and maintenance provider for small and medium facilities
in East Japan) and Do Service Co., Ltd. (cleaning services provider for small and medium facilities in West Japan) resulted in thebirth of Aeon Delight Connect Co., Ltd., which is set to become a key subsidiary in the small and medium facility market, helping
Aeon Delight accelerate the formation of regional economic zones. Aeon Delight Connect expects to expand its offerings by
proposing new services in addition to the construction, facility maintenance, and cleaning services that A to Z Service and Do
Service already provided. In addition, in March 2021, U-COM (design and interior work for commercial facilities) underwent anabsorption-type merger. By incorporating U-COM’s operations into its construction business, the company intends to eliminate
overlapping operations, consolidate management resources, and enhance the Construction Work business.

Response on poorly performing properties
Aeon Delight’s main businesses, Facilities Management, Security Services, and Cleaning Services, are labor-intensive, so costs
have been in an upward trend due to the manpower shortage. The company intends to reduce costs while maintaining or even
improving the quality of its services by increasing efficiency through mechanization and automation, and by sharing management
11/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

personnel on a regional basis rather than a property basis. In the case of Security Services, the company encourages customers tosystematize entry/exit management and closing operations, thereby reducing the number of permanently stationed personnel
while increasing sales per employee and improving margins. In the case of Facilities Management and Cleaning Services, thecompany intends to reduce manpower by improving work processes and expanding the use of autonomous cleaning robots.
The company’s proof of concept (POC) in Hokkaido is a good example of how to move from securing personnel on aproperty-by-property basis to sharing personnel on a regional basis. Conventionally, the company’s facilities management
personnel would be assigned to individual customer facilities (customers would have full control of the employee’s time). With
the new method, facilities management personnel are shared across a region rather than being assigned to specific facilities. They
monitor the operational status of the facilities remotely and can rush to a specific site as needed. Based on the Hokkaido POC, thecompany is introducing the initiative mainly at Aeon Malls in Kanto and Kansai (84 stores as of April 2021). Although sales havedeclined, profit has grown due to a cost reduction of about 10%.

Review of initiatives by business▷

In Facilities Management, Aeon Delight expects enhanced area management and reduced outsourcing costs to lead to
improved profitability, leading to higher sales and profit.

▷

In Security Services, in addition to continuing efforts to improve efficiency, reduce manpower, and mechanize operations, thecompany plans to optimize unit prices to pass on the increased costs triggered by a rise in personnel costs.

▷

In Cleaning Services, with increasing demand for preventive measures amid the pandemic, the company plans to increase thenumber of contracts it handles by proposing “new standard cleaning” based on standards for the with-COVID era not only tocommercial facilities, but also to office buildings and other facilities.

▷

In Construction Work, Aeon Delight plans to increase the number of contracts it receives from the Aeon group by making useof U-COM (responsible for design and planning of buildings for the Aeon group), which underwent an absorption-typemerger in March 2021, and to lower procurement costs by working with Materials and Supplies Sourcing Services to obtain
construction materials in bulk, thereby increasing sales and profit.

▷

In Materials and Supplies Sourcing Services, it plans to reduce procurement costs, improve logistics efficiency, and coordinate
with the Construction Work business to enhance procurement capabilities.

▷

In Vending Machine Services, in light of stagnant demand for beverages due to a decline in the number of customers visiting
commercial facilities, the company will work to improve profitability by replacing unprofitable vending machines with its own
multibrand vending machines.

▷

In Support Services, it expects easing of the pandemic impact and growing demand for home-delivery-type cleaning services
to lead to higher sales and profit.

12/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Historical forecast accuracy
Results vs. Initial Est.

FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales (Initial Est.)

213,000

260,000

260,000

270,000

280,000

305,000

305,000

305,000

315,000

315,000

Sales (Results)

219,797248,876

256,654

265,572

277,926

292,607292,396

302,915

308,582

300,085

3.2%

-4.3%

-1.3%

-1.6%

-0.7%

-4.1%

-4.1%

-0.7%

-2.0%

-4.7%

Operating profit (Initial Est.)

14,30016,60015,50016,00017,00017,50018,00018,50018,00016,500Operating profit (Results)

13,762

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,230(JPYmn)Results vs. Initial Est.

Results vs. Initial Est.

FY02/21-3.8%-16.3%

-5.7%

-3.8%

-14.4%-19.2%-28.3%-29.6%-11.1%-7.7%

Recurring profit (Initial Est.)

14,30016,60015,50016,00017,00017,50018,00018,50018,00016,500Recurring profit (Results)

13,784

13,892

14,60015,472

14,534

14,263

13,381

13,362

15,94915,268-3.6%-16.3%

-5.8%

-3.3%

-14.5%-18.5%-25.7%-27.8%-11.4%

-7.5%

7,600

8,700

8,300

8,600

9,400

10,00010,70011,00010,80010,000Results vs. Initial Est.
Net income (Initial Est.)
Net income (Results)

6,912

7,509

7,039

7,965

7,247

7,093

6,397

6,415

9,348

11,680Results vs. Initial Est.

-9.1%

-13.7%-15.2%-7.4%-22.9%-29.1%-40.2%-41.7%-13.4%

16.8%

Source: Shared Research based on company data.
Note: Results through FY02/18 have not been retrospectively adjusted.

13/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Medium- and long-term outlook
Medium-term plan
FY02/21(JPYmn)Cons.
Sales
300,085
YoY-2.8%
Operating profit
15,230
YoY-4.8%
Operating profit mar
5.1%
Net income
11,680
YoY
24.9%
Net margin
3.9%
Sales: non-Aeon Group
35%
Sales: overseas ratio
6.7%
ROE
14.1%

FY02/22FY Est.
325,000
8.3%
16,500
8.3%
5.1%
10,500-10.1%
3.2%

FY02/24
Targets
361,000

FY02/26
Targets
471,000

3-year
CAGR
6.4%

5-year
CAGR
9.4%

22,00037,000

13.0%

19.4%

6.1%
14,000

7.9%

3.9%
40%
Over 8%12%

50%Over 15%
15%

Source: Shared Research based on company data

Aeon Delight Vision 2025
In October 2018, the company announced Aeon Delight Vision 2025 (“Vision 2025”). Aeon Delight’s management principle calls
for the creation of “environmental value” for clients and regional communities. In accordance with this principle, Vision 2025
aims to transform Aeon Delight into a company that creates environmental value and contributes to solving social issues, with“safety and security,” “manpower shortage,” and “environment” as three pillars of its growth strategy. Thereafter, in the face ofaccounting irregularities at Kajitaku in FY02/20 and pandemic-related delays in some measures in FY02/21, Aeon Delightannounced new targets when it released its FY02/21 earnings results, although with no change in the company’s overall direction.
The new targets for FY02/26 are sales of JPY471.0bn (CAGR of 9.4%), operating profit of JPY37.0bn (CAGR of 19.4%), and ROE
and at least 15% (ROE was 14.1% in FY02/21). (It was previously targeting sales of JPY525.0bn and operating profit of JPY48.0bn).
The company is aiming for top ten sales and top-level OPM globally and number one sales in Asia in the facility management
industry. To become one of the top ten companies in the world, the company is aiming to expand its market share in Japan byconstructing Aeon Delight (AD) economic zone and concentrating management resources in China for its overseas operation.

Medium-term plan (FY02/22–FY02/24)
In April 2021, Aeon Delight formulated a medium-term plan covering the next three years (FY02/22–FY02/24) as it moves towardrealizing the goals of Aeon Delight Vision 2025. The medium-term plan targets FY02/24 sales of JPY361.0bn (CAGR of 6.4%),
operating profit of JPY22.0bn (CAGR of 13.0%), and net income of JPY14.0bn. By FY02/24, the company aims to increase sales
within the Aeon group by JPY25.0bn versus FY02/21 to approximately JPY220.0bn (60% of total sales, -5pp versus FY02/21),
while growing sales outside the Aeon group by JPY35.0bn to about JPY140.0bn (40% of total sales, +5pp versus FY02/21) andraising OPM to 6.0% (+0.9pp versus FY02/21). It aims to achieve this sales growth and OPM improvement by putting
customer-oriented group management into practice and promoting digital transformation (DX).

Customer-oriented management
Customer-oriented management: Increase in ratio of sales outside Aeon group
Under the medium-term plan, Aeon Delight plans to increase sales outside the Aeon group to approximately JPY140.0bn(+JPY35.0bn versus FY02/21) by FY02/24, raising the ratio to total sales to 40% (+5pp versus FY02/21).
Since the pace of openings of large new Aeon group stores has slowed in Japan, the company aims to expand its share in
non-Aeon group and overseas markets.
It has already been expanding its presence in the non-Aeon group market (the ratio of sales outside the Aeon group rose from
34% in FY02/11 to 36% in FY02/21). However, the allocation of its sales resources to the non-Aeon group market has been
limited because its long-term growth has been specifically linked to the Aeon group’s own aggressive store opening strategy.

14/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Under the medium-term plan, the sales division will be divided into two teams; one to develop new customers and the other toexpand the share of services provided to existing customers. For existing customers, the company will assign account managers
who will be responsible for all transactions with each customer, grasp the needs of that customer, and track and analyze trends inthe industry to which the customer belongs.
In addition, Customer Support Centers (CSCs), which began operating at all eight branches in Japan in March 2021, willconsolidate information about each facility and its requirements. The company will analyze this information by customer and byfacility for use in service development and quality assurance, with the aim of providing all customers, new and existing, with
optimal solutions for the challenges they face.

Customer-oriented management: Development of Aeon Delight platform
Aeon Delight aims to create a system that transforms customer feedback into organizational strength in service development,
quality assurance, and sales. To that end, the company believes it is necessary to have a mechanism for collecting and analyzing a
range of data (including customer feedback, facility conditions, and market trends in customers’ industries) and processing it into
valuable information.
At the same time, it will develop Aeon Delight Platform to serve as a conduit for efficiently sharing information and data analysis
results not only internally, but across its entire service network, including group companies and their partners. To build such asystem, in February 2021 the company reorganized its sales and business divisions and all domestic branches, and established amarketing DX division to oversee them.
With Aeon Delight Platform, the sales division will strengthen the company’s relationships with its customers to better
understand their needs, along with trends in the industries to which they belong. Furthermore, as mentioned, CSCs, whichbegan operating at all eight branches in Japan in March 2021, will consolidate and analyze information about each facility and its
requirements. The information will be used in service development and quality assurance as the company aims to provide
customers with optimal solutions.

Promotion of digital transformation (DX)
Promotion of DX: Nationwide rollout of area management system centered on CSCs
Aeon Delight established CSCs at all eight domestic branches in March 2021 and will promote area management nationwide
based on the results of proof-of-concept testing at the Hokkaido branch. Under its medium-term plan, it aims to increase thenumber of facilities subject to area management to 360, allowing it to reduce the number of facilities management personnel by
180 people.
Centered on the CSCs, the company will develop a new facilities management model using DX to address the manpower
shortage and reduce the number of permanently stationed facilities management personnel. It aims to replace the conventional
facilities management model (management of individual stores) with an area management model in which personnel are sharedby facilities in a certain area.

Proof of concept at Hokkaido branch: With the cooperation of Aeon Hokkaido, the company conducted proof-of-concept testing in FY02/21 at its
Hokkaido branch to determine the viability of area management. It established a CSC at the Hokkaido branch first and, in addition to a remote alarm
management system, set up a monitoring station that integrates systems for monitoring the status of equipment within facilities and any anomalies. At
Aeon Yoichi, the store used in the test, the company installed various systems and sensors, and facility inspection operations were shifted to the CSC tobe conducted remotely. By enabling this operating structure centered on the CSC from daily inspection work to emergency response, Aeon Yoichi hasachieved an unmanned management of onsite facilities since November 2020.

Promotion of DX: Relocation of head office
Aeon Delight will relocate its Tokyo head office in September 2021 to consolidate its head office functions. By updating theequipment and layout of the new head office, the company plans to create an environment in which diverse human resources
using a variety of work styles can all maximize their performance.

15/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

The head office will be constantly in contact with CSCs located in branches, allowing real-time sharing of customer status. In
addition, it will employ energy-saving and BCP measures and be open to the public as an example of an advanced facility
environment, making it a strategic office for disseminating information on facilities management, allowing the company toexpand its business opportunities.
Furthermore, as part of consolidating head office functions, the company will review its business processes, reduce head office
staff by 20%, and reassign those employees directly to relevant departments to improve productivity.

Group management
Group management: Establishment of Aeon Delight Connect for management of small and medium facilities
In March 2021, Aeon Delight combined consolidated subsidiaries A to Z Service Co., Ltd., and Do Service Co., Ltd., to establish
Aeon Delight Connect. It plans to make Aeon Delight Connect a core subsidiary for the management of small and medium
facilities and to expand its service offerings to more customers, including by developing new markets. In this way, it aims to
expand its business domain.

Group management: Establishment of company to oversee China business
In April 2021, the company established Aeon Delight China (AD China) to oversee its operations in China. It had alreadyestablished a local subsidiary in Beijing in 2007. Thereafter, it built a business foundation and expanded its service network in
China by adding to the group two local companies; Aeon Delight Jiangsu in 2012 and Wuhan Xiaozhu Property Management in2013. Taking advantage of the expertise and energy-saving technologies the company has cultivated in Japan, the two
subsidiaries, Aeon Delight Jiangsu and Wuhan Xiaozhu, have expanded their businesses by participating in regional
redevelopment projects and providing services in various regions and types of facilities, including large commercial facilities,
upscale residential buildings, and transportation infrastructure facilities.
With the establishment of AD China, the company aims to promote synergies among companies operating in China and enable
comprehensive management of the quality of services provided there, so that it can establish the Aeon Delight brand in China asa reliable brand. In addition, it intends to accelerate growth in China by providing support to its companies operating there,
especially in the North, East, Central, and South China areas.
Aeon Delight also aims to expand its operations in Vietnam, where it expects Aeon Mall to actively open new stores. It will
particularly target Japanese companies entering the Vietnamese market.

Group management: Consideration of M&A candidates
The company considers M&A to be an important strategy for achieving the goals of its Vision 2025 plan, so in the five years from
FY02/22 to FY02/26 it will consider M&A, with a maximum ownership limit of about JPY25.0bn. M&A objectives would be tocreate regional economic zones and overseas bases and to expand the company’s business domain (for example, by acquiring
companies that conduct facilities management business for hospitals or factories).
In selecting investment projects, the company will take into account the capital cost and implement the following three financial
measures. First, it will decide a standard for holding a certain level of liquidity on hand; second, it will secure a variety of financing
sources; and third, it will establish financial discipline. To ensure adequate liquidity on hand, it maintains cash and deposits(about JPY50.0bn) equivalent to two months’ sales (1.5 months for working capital and 0.5 months as a risk reserve), while taking
into account the cost of capital. The company plans to use surplus cash and deposits mainly for M&A and other growth strategies,
but may also invest in low risk options such as securities. It intends to invest for growth, including M&A, and is consideringobtaining a credit rating with a view to financing externally in case it is unable to cover investments with its own cash reserves.
When financing externally, the company understands that it needs to maintain a certain degree of financial discipline, such as
reducing its net assets in line with its ROE target.

16/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Group management: Promotion of shared services and creation of a suitable organizational culture
Aeon Delight will continue working to enhance group governance to prevent improper conduct by group companies. As part ofthis effort, it will promote the consolidation of finance and accounting departments (shared services) to increase the reliability offinancial statements produced by group companies. Based on reflection regarding the accounting irregularities at the old Kajitaku,
the company will establish an organizational culture committee, because it is critical to have a suitable organizational culture tocomplement basic administrative mechanisms and rules.

Dividends
In FY02/21, Aeon Delight changed its targeted payout ratio to 35%. Since its policy is also to avoid reducing dividends, thecompany is planning a dividend of JPY84.0 (including a JPY10.0 commemorative dividend) in FY02/22 (versus JPY82.0 in
FY02/21), for a payout ratio of 40% (versus 35.1% in FY02/21). It aims to keep the payout ratio at 40% for the duration of its
current medium-term plan (FY02/22–FY02/24).

17/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Business
Business description
Aeon Delight provides maintenance services for retail facilities and office buildings. The company, formerly known as Japan
Maintenance (a subsidiary of MyCal Corp.), was established mainly to undertake maintenance at Mycal stores in November 1972.
Mycal filed for bankruptcy in September 2001 (delisted on September 17, 2001), and became a subsidiary of Aeon in 2003. Japan
Maintenance merged with Aeon Techno Service and the name was changed to Aeon Delight in September 2006. As of FY02/13,
the company derives 60–70% of sales from Aeon Retail Co., Ltd. and other Aeon group companies.
Aeon Delight handles between 80% and 90% of the facilities management work required by Aeon Retail, and about 65% of suchwork required by Aeon Mall Co., Ltd. (TSE1: 8905). Facilities management work at Aeon Mall was previously done by a subsidiaryof Diamond City, a Mitsubishi Corp. (TSE1: 8058) affiliate absorbed by Aeon Mall in 2007. The company is aiming to increase theshare of work handled for Aeon Mall by following its overseas expansion in recent years and keeping a close relationship. Aeon
Delight also handles between 60% and 70% of the facilities management work at MaxValu retail stores owned by the Aeon
group.

M&A activities
Aeon Delight is active in M&A. It has purchased companies in cleaning, building management, and store interior construction. It
has also purchased companies in businesses ancillary to facilities management, and been proactive in seeking out alliances inother formats. In 2018 it announced collaboration with SECOM (TSE1: 9735) to create a new business model for small andmedium-sized facilities.

Business model
Aeon Delight became a leading integrated facilities management operator through its relationship with the Aeon group. It has
also grown through acquisitions. The company derives its earnings by providing an integrated, all-in-one package of facilities
management services to large retail and commercial properties. It was able to differentiate itself from competitors by its expertiseand costs competitiveness. Competitors included Tokyu Community Corp. (not listed), Biru Daiko Co., Ltd., Nihon Housing Co.,
Ltd. (TSE2: 4781), and Nippon Kanzai Co., Ltd. (TSE1: 9728).
There are three type of property management, residential, commercial, and office buildings. Most of these competitors weremainly involved in residential management of condominiums. Few other large companies were focused on commercial facilities
and building management due the high costs involved. The company was able to gain expertise in commercial property
management through servicing large retail facilities such as shopping malls and supermarkets. The property maintenanceindustry includes over 5,000 companies, most of which are small and medium-sized businesses.
The structure of the building maintenance industry resembles that of the construction industry, with second- and third-tier
subcontractors working under prime contractors. Aeon Delight, a prime contractor, uses a number of subcontractors. Most of its
contracts are signed on an annual basis, which are almost always renewed. In other words, it has a recurring-revenue structure.
The company renegotiates contracts once a year, a process that regularly challenges its pricing, quality, and ability to offer clients
attractive packages. For example, the parent company Aeon conducts a competitive bidding to keep the process fair and open.
However, Aeon Delight is able to provide competitive bids given its knowledge of the client’s needs, and know-how. Its superior
position as a large company with comprehensive reliable services will be further enhanced as the size of buildings expands. The
company is able to handle large facilities maintenance given its size and economy of scale, which further reinforces its strengthand position. Thus, Shared Research believes that Aeon Delight’s position within the commercial facilities industry is likely to
improve, as the company has know-how and expertise.

18/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Business overview
Aeon Delight operates seven main business segments: facilities management, security services, cleaning services, construction
work, materials and supplies sourcing services, vending machines, support services and other. When the company takes on
integrated facilities management work, sales and profits will be booked across segments. With the expansion of IFM, sales ofcatering services (included in Support Services) are expected to increase, for example, and, as a result, segment analysis isbecoming less effective.
Its customers included Aeon Retail, Aeon Mall, and MaxValu companies, while non-Aeon group customers were commercial
facilities, office buildings, hotels, medical and welfare facilities, schools, factories, and warehouses.

Facilities Management
Facilities Management(JPYmn)Sales
YoY

Operating profit
YoY
Operating profit margin

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
42,14742,05043,45845,83948,96250,551
52,69956,36458,28958,223
5.3%

-0.2%

3.3%

5.5%

6.8%

3.2%

4.2%

7.0%

3.4%

5,084

4,661

4,725

4,217

4,206

4,350

4,644

5,558

5,293

-0.1%

5,175

-0.6%
12.1%

-8.3%
11.1%

1.4%
10.9%

-10.8%
9.2%

-0.3%
8.6%

3.4%
8.6%

6.8%
8.8%

19.7%
9.9%

-4.8%
9.1%

-2.2%
8.9%

Source: Shared Research based on company data

This segment is involved in inspection, protection, and maintenance of facilities, providing monitoring support 24 hours a day,365 days a year. Specific services are tailored to meet the needs of individual clients. This is a staple business for Aeon Delightwith few contract cancellations. Licensed technicians (such as electricians) are on standby at all times in large shopping centers.
Specifically, the company manages utilities such as electricity, water, and gas, HVAC (operations, repairs, construction, andrequired inspections), exit and entrance management, anti-theft measures, and automobile parking. Operating profit margin is
about 9%. Required facilities are purchased by the client (property owner), and primarily costs incurred by the company are
personnel costs and facilities management costs (water and utilities costs and depreciation). The company puts personnel on-siteat large retail facilities, while smaller facilities are visited periodically and monitored remotely.

Utilization of technology: Next-generation facilities management model
The next-generation facilities management model refers to an open facilities management network system developed by thecompany. The system is currently in operation at five commercial facilities including one in Suzhou, China and one in Chiba,
Japan. While acquiring contracts for IFM services that integrate management for companies, the company is also enthusiastic
about creating a de facto standard for facilities management in Asia using this platform.
Using IoT, the system performs remote monitoring and automatic control of air conditioning and lighting (and eventuallyrefrigeration). It is an open network utilizing existing control equipment and IoT; it has a low installation cost (in some cases, it
can reduce costs by half through multiple vendors); enables lower operation costs by reducing necessary manpower throughremote monitoring; and saves energy (system in China saw 25% energy saving for air conditioning and 16% energy saving in
Chiba, Japan). In China, a 50% reduction is expected after the system is applied to lighting and refrigerators. Likewise, a 30%
reduction is expected in Chiba, Japan. The company is watching out for replacement demand for central monitors (every 15–20
years) to capture replacement orders with its accumulated commercial facilities management know-how. It also plans to utilize its
big data and AI.
While leveraging its track record for large commercial facilities, its specialty, the company is also rolling out the system in otherareas including drug stores to secure market share. In Asia ex. Japan, new purchases account for most market demand while inJapan most demand is replacement demand. The company intends to make its services the de facto industry standard not only in
IFM but also in conventional facilities management.
The company appears to be considering several business models such as one that generates more sales and profits at installation,
one that generates sales and profit through operation, and one that generates profit when energy savings or other measures

19/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

exceed a certain level. The company’s next-generation facilities management system, one of its value-added services, leads to lessmanpower required for commercial facilities. As such, profitability is expected to rise with sales.
Monitoring screens displayed at a large facility in Chiba (operates in parallel with a central monitor)

Source: Shared Research based on company data

Security Services
Security Services(JPYmn)Sales
YoY

Operating profit
YoY
Operating profit margin

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
32,23531,80534,242
36,62238,456
41,06843,29044,49244,64744,393
0.5%

-1.3%

7.7%

7.0%

5.0%

6.8%

5.4%

2.8%

0.3%

-0.6%

2,823

2,692

2,865

3,102

3,032

3,110

2,857

2,881

3,038

3,307

2.1%
8.8%

-4.6%
8.5%

6.4%
8.4%

8.3%
8.5%

-2.3%
7.9%

2.6%
7.6%

-8.1%
6.6%

0.8%
6.5%

5.4%
6.8%

8.9%
7.4%

Source: Shared Research based on company data

This segment provides comprehensive security services (i.e., security for facilities, security to handle crowds and traffic, andprotection of valuable goods). By combining manual labor and the latest advances in technology, the company provides
customized security solutions to clients.
It places security guards at client facilities, and recurring revenue business with ongoing security services is common. This
segment outsources most of its work to Aeon Delight Security, a subsidiary. Due to heavy personnel costs for security guards, theoperating profit margin is stuck at about 7%.
The company also offers an attendant security service, which is similar in nature to a concierge service. Attendants are female
security guards that also provide information services to patrons. This service was started in an effort to shed the old “security
guard” image and provide a more hospitable environment. Although costs will arise from staff training, this business provides
high added value.

Cleaning Services
Cleaning Services(JPYmn)Sales
YoY

Operating profit
YoY
Operating profit margin

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
39,85240,51942,32044,28747,87053,36555,29758,18562,36262,459
-3.1%

1.7%

4.4%

4.6%

8.1%

11.5%

3.6%

5.2%

7.2%

0.2%

5,882

5,918

5,716

6,289

6,031

6,012

6,228

6,694

6,967

7,324

-0.9%
14.8%

0.6%
14.6%

-3.4%
13.5%

10.0%
14.2%

-4.1%
12.6%

-0.3%
11.3%

3.6%
11.3%

7.5%
11.5%

4.1%
11.2%

5.1%
11.7%

Source: Shared Research based on company data

The company provides cleaning services, mainly in large shopping centers for the Aeon group. Because large commercial
facilities tend to have a wide variety of people passing through and frequent layout changes, it is a relatively difficult area of thecleaning industry. Although it is a labor-intensive business, the company has implemented measures to increase efficiency oflarge machinery such as floor cleaners. These and other initiatives serve to standardize and increase the efficiency of work
performed. This is a recurring revenue business and the company has built long-term relationships with about 80% of its
customers in this segment.
On an orders-received basis, the business is composed of about 10–20% work performed directly by the company, and 80–90%
work performed by outsourcing partners. Primary outsourcing partners are Do Service Co., Ltd. and Kankyouseibi Co., Ltd.

20/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Approximately 30,000 persons are involved in the cleaning services business. In recent years, the company has been working tosecure orders in the hygienic cleaning business, previously untapped territory for it, which can lead to high value-added services.

Hygienic cleaning business
The company believes the hygienic cleaning business will continue to steadily increase sales. There are more than 1.5mn hospitalbeds in medical facilities across Japan, out of which the number of hospital beds at medical facilities Aeon Delight has hygienic
cleaning contracts with still make up only 2–3%. Aeon Delight began offering hygienic cleaning services in FY02/15 and beganproviding service to two major medical facilities in April 2015. As of April 2015, the company was providing hygienic cleaning
services for 14,000 beds. In 2018, that number has increased to over 25,000 beds. The company is in the middle of expanding
sales to about 100 hospitals. For sales to hospitals, it takes about three years from general bidding to winning a project, as manylarge hospitals are under the jurisdiction of the government.
Japanese hospitals and clinics
Hospitals
As of October 1, 2019

Clinics
Beds

Total

8,300 1,529,215

National

Beds
102,616

90,825322

126,423

537

2,175

1,202

311,724

3,522

2,419

Social insurance-related organizations

51

15,523450-

Public service corporations

199

49,152509

263
69,070Public medical institutions

Medical corporations

5,720

855,804

43,593

Private schools

111

54,068188

38

Social welfare services

197

33,64010,015352

Individuals

174

16,45741,073

15,969Other

324

66,424

2,729

539

Source: Shared Research based on data from Ministry of Health, Labour and Welfare

Because many of the large domestic hospital chains are keen on implementing management reforms, Aeon Delight believes thatits integrated facilities management service can match these hospital chains’ needs for improved sanitation, environmental
conditions, safety, peace of mind, service standardization, and cost reductions. Contract renewal for hygienic cleaning services
typically happens every year, so it is difficult to turn it into a recurring revenue business. That said, a limited number of companies
have the scale needed to provide bulk cleaning services for major groups with many medical facilities nationwide. Aeon Delightpresents proposals capitalizing on 1) its roughly 600 bases nationwide; 2) its name recognition as a publicly traded company andas a member of the Aeon group; 3) its track record with major medical institutions; and 4) the visible quality of its cleaning
services.
Because hospitals and other medical centers must take steps to prevent patients from becoming infected or transmitting theirdisease to others while they are in the hospital, Aeon Delight actually offers clients a numerical scale that gives them a visual
measure of cleaning quality. During FY02/15, most of the marketing for its hygienic cleaning services was done by a special sales
team. However, after receiving training and sharing all the related sales tools, local offices have also been doing their own
marketing since FY02/16. The profitability was low when the company entered the hygienic cleaning business. However, itappears profitability has been improving as its cleaning staff becomes increasingly proficient at their duties.

Construction Work
Construction Work(JPYmn)Sales
YoY

Operating profit
YoY
Operating profit margin

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
28,51353,071
45,63041,97243,85545,81440,897
41,47041,84440,657
73.6%

86.1%

-14.0%

-8.0%

4.5%

4.5%

-10.7%

1.4%

0.9%

-2.8%

1,936

2,209

2,580

2,807

3,218

3,210

3,305

3,989

3,816

3,880

59.5%
6.8%

14.1%
4.2%

16.8%
5.7%

8.8%
6.7%

14.6%
7.3%

-0.2%
7.0%

3.0%
8.1%

20.7%
9.6%

-4.3%
9.1%

1.7%
9.5%

Source: Shared Research based on company data

This segment conducts large-scale renovation, interior design work, restoration, and installation of energy-saving devices (i.e.,
LED lighting) and solar power systems. This segment generates roughly 60% of its sales from Aeon group companies. Renovationis remodeling (not designing) of Aeon retail locations, such as replacing signage, or modifying retail floor space. In recent years,

21/52

R

Aeon Delight / 9787

Coverage

LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

there has been an increasing amount of work related to changeover of tenants inside Aeon Malls (restoration and new interiors).
In April 2018, Aeon Delight made store design specialist U-COM a wholly owned subsidiary, and the upstream approach hasenabled it to win an increasing number of contracts from outside the Aeon group.
Construction work process for commercial facility tenant replacement
Moving out
01

02

Temporaryenclosure

03

Restoration

Peripheral work

construction work

related to temporary
enclosure andrestoration

Zoningconstruction work

Moving in
04
Preliminary
research

07
05
Development
plan

06
Planningand design
outlineDesign &construction

08

Zoning andrestoration work

construction
management

Interior

09
Construction
andmanagement

10
Transfer

11
Maintenance

12
Facility
mgmt.,
cleaning,
security

Source: Shared Research based on company data

Materials and Supplies Sourcing Services
Materials and Supplies Sourcing(JPYmn)Sales
YoY

Operating profit
YoY
Operating profit margin

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
36,73039,28444,54347,61850,51650,74050,26551,007
51,12553,060
96.2%

7.0%

13.4%

6.9%

6.1%

0.4%

-0.9%

1.5%

0.2%

3.8%

1,234

1,462

2,333

2,111

2,806

2,774

2,868

2,779

2,489

2,467

96.8%
3.4%

18.5%
3.7%

59.6%
5.2%

-9.5%
4.4%

32.9%
5.6%

-1.1%
5.5%

3.4%
5.7%

-3.1%
5.4%

-10.4%
4.9%

-0.9%
4.6%

Source: Shared Research based on company data

Through efficient logistics, this business reduces costs for intermediate materials used in offices and retail stores. The segment
deals in items such as plastic bags, gift bags, clothing, and other consumables (employee stationery, cleaning materials, etc.). In
this business, stock must be maintained at all times, and the company undertakes logistics functions on behalf of the customer aswell. Aeon Delight aims to use efficient logistics to reduce costs for intermediate materials and increase process efficiency. It isdifficult to add value in this area, but the operating profit margin is about 5%.

Vending Machine Services
Vending Machine Services(JPYmn)FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Sales

32,28031,20033,32934,82532,74132,87932,834

31,95531,54425,453

YoY

87.8%

-3.3%

6.8%

4.5%

-6.0%

0.4%

-0.1%

-2.7%

-1.3%

-19.3%

2,330

2,396

3,068

2,965

2,846

2,812

2,105

1,164

1,396

653

YoY

57.4%

2.8%

28.0%

-3.4%

-4.0%

-1.2%

-25.1%-44.7%

19.9%-53.2%

Operating profit margin

7.2%

7.7%

9.2%

8.5%

8.7%

8.6%

6.4%

3.6%

4.4%

2.6%

Operating profit

Source: Shared Research based on company data

This segment operates soft drink vending machines. It also creates relaxation areas with foliage plants and air purificationequipment.
The company’s vending machines stock a variety of products from different manufacturers. Aeon Delight operates approximately
40,000 vending machines (as of the end of FY02/19). About 80% of vending machine sales come from machine in supermarkets
belonging to the Aeon group. The remaining 20% of sales came from machines in shopping malls operated by Aeon group andnon-Aeon companies. In September 2010, Aeon Delight acquired vending machine operator Certo Corp., which spun off fromthe trading division of Aeon.
Also, aiming for a business model change, the company seeks to increase the number of vending machines equipped with digital
signage functionality (about 2,700 machines at end-FY02/19) and capture advertising revenues.

22/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Support Services
Support Services(JPYmn)Sales
YoY

FY02/12 FY02/13 FY02/14 FY02/15 FY02/16 FY02/17 FY02/18 FY02/19 FY02/20 FY02/21
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
Act.
8,037
10,942
13,12914,406
15,52418,18817,325
19,43918,76815,837
50.9%

36.1%

20.0%

9.7%

7.8%

17.2%

-4.7%

12.2%

-3.5%

-15.6%

312

741

336

281

-580

-850

-1,466-2,270416-75-47.1%
3.9%

137.5%
6.8%-54.7%
2.6%-16.4%
2.0%

-3.7%

-4.7%

-8.5%

-11.7%

2.2%

-0.5%

Operating profit
YoY
Operating profit margin

Source: Shared Research based on company data

This segment provides business process outsourcing (BPO), housework support services, business travel services, training
services, and staffing services. Much of these support services are conducted by companies acquired through M&A.
The company entered the BPO services market with the acquisition of General Services, Inc. Services that BPO undertake include
cost management, salary calculations, administrative functions, social security and welfare, receipt of telephone calls, and systemmanagement.
The main subsidiaries in the segment are 1) Aeon Compass: mainly B2B services including Business Travel Management(domestic business trips, support for overseas assignments) and MICE (planning and management of meetings, seminars,
trainings), and 2) Actia: household support services.

Kajitaku: In 2019, accounting fraud was discovered at subsidiary Kajitaku, which operated storefront promotion and housework support businesses. The
company submitted corrected financial statements covering FY02/14 through FY02/18. In February 2020, it spun off the housework support business,
which got a new start under the name Actia. In June 2020, the company sold the ID photo machine business of Kajitaku (renamed KJS), and in FY02/21
withdrew from the smartphone printing and picture palette businesses of KJS. In February 2021, Aeon Delight conducted an absorption-type merger
with KJS and took over the copy machine business, for which some customers still have contracts in force.

Additionally, A to Z Service Co., Ltd., a maintenance service provider for small commercial facilities, was converted to a subsidiaryin 2011. In addition to designing small-scale stores for nationwide chains and providing subsequent facility management,
equipment maintenance, and general maintenance services, A to Z Service operates a 24 hour, 365 days a year call center toprovide comprehensive support services for retail chains in small shopping centers. Aeon Delight Academy, Co., Ltd. operates
the “Aeon Delight Academy Nagahama” in Shiga Prefecture to provide real-world training. It also operates a staffing service fortechnical professions.

Overseas business
Aeon Delight sees China and ASEAN as main growth drivers. In China, the company mainly operates through its subsidiaries in
Suzhou and Wuhan. It made both wholly owned subsidiaries in 2018 to speed up decision making. For now, it plans to target the
Yangtze River Delta and surrounding regions to build up its brand power as a company that provides quality facilities
management. In the medium term, it plans to expand its business to the northern and southern regions. In ASEAN, the company
has subsidiaries in Indonesia, Malaysia, and Vietnam. The Indonesian business purchased in 2018 is the second-largest company
in the cleaning industry in the promising Indonesian market. Aeon Delight plans to provide its expertise in other facility services
and win outsourcing contracts locally.

23/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Strengths and weaknesses
Strengths◤ Strong ties with the Aeon group: Aeon Delight is a subsidiary of Aeon Co., Ltd., and almost 70% of sales are generated

from the Aeon group. This provides for stable sales, and the Aeon group’s expansion into Asia is also proving to be a positive
factor for Aeon Delight’s growth. The company is able to leverage economies of scale from the Aeon group, and has
accumulated expertise in integrated FMS from its transactions with Aeon. This provides for a stable recurring-revenue model.
◤ Industry leader in facilities management: Aeon Delight is the industry leader capable of providing integrated all-in-one

building maintenance services such as facilities management, security, cleaning, and renovations that are non-core activities
for many companies. Its competitors can only provide one to two of these services (i.e., security or cleaning). The number ofcompanies that can provide one-stop services is limited.
◤ Ability to generate stable cash flows: Over the past five years, average operating cashflow has been JPY11.0bn per annum,

and the company has spent JPY2.8bn per year on the acquisition of tangible fixed assets, generating total cashflow of about
JPY8.0bn. The company is using stable cash flow to invest strategically in acquisitions and technological development basedon its longer-term vision. If there are no investment outlets that meet its growth strategy, the cash flow funds shareholder
returns. Over the past five years, Aeon Delight has spent an average of JPY3.0bn in dividend payments (cash flow basis) yearly.
In FY02/19 it spent JPY9.9bn on a share buyback. The company targets a dividend payout ratio of 35% from FY02/21 onward.

Weaknesses◤ Limited organic growth: Aeon Delight depends mainly on the domestic market which generates about 95% of sales. The

markets for its existing businesses in Japan are mature, which is a weakness in terms of the company’s growth potential. It will
be challenging to sustain growth, as Aeon Delight must rely on aggressive development overseas and winning contracts inancillary businesses as an FMS company and growing market share.
◤ Heavy dependence on the Aeon group: Aeon Delight is a consolidated subsidiary of Aeon, and derives just over 60% of its

sales from the Aeon group. A drawback from such a strong relationship is that the parent company may ask for support inpursuing its agenda. Recently, Aeon acquired 50% of Tesco Japan, the U.K. supermarket chain operator’s Japan retail business.
A joint venture company, Aeon Every Co., Ltd. is in charge of supermarket operations. The parent Aeon could ask thecompany for support in future acquisitions.
◤ Mature property management market: The property management market is relatively mature. However, small retail storesin urban areas offer growth opportunities given the greater number of customer volume. Many small retailers are renovating
their stores and upgrading facilities. Aeon Delight’s expertise has been in large facilities, mainly supporting the Aeon groupretail stores such as shopping centers and supermarkets. As smaller commercial facilities emerge in large urban areas, thequestion remains whether the company can successfully adapt its facilities maintenance know-how to this segment of themarket. The company may need to look at this segment for growth.

24/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Market and value chain
Market overview
Japan’s building maintenance market was worth roughly JPY4.2tn in FY2019 (April 1, 2018 to March 31, 2019), up 7.0% YoY,
according to a survey released in October 2020 by Yano Research Institute Ltd.
Building maintenance market includes building cleaning, facilities maintenance, and security services. It also includes repair work, renovation work, andrenewal work undertaken by building maintenance companies. But businesses unrelated to building maintenance are not included in the data eventhough they are undertaken by these companies.

Market size (RHS)

6%
4%
2%

3,675

3,704

3,738

3,995

3,809
3,702

3,682

3,744

3,572

0%

3,773
3,663

(JPYbn)

4,276

YoY

3,977

3,835

3,740
3,743

4,200

3,934

4,000
3,800
3,600

3,421

-2%

3,400

-4%

3,200

-6%

3,000

-8%

2,800

FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Est.
Est.

Source: Shared Research based on Yano Research Institute Ltd. materials (July 9, 2019)

Building maintenance services were mainly used by office buildings (21.8%), shops and commercial facilities (18.3%), medical
and welfare facilities (9.9%), factories and workplaces (9.6%), and education facilities (9.9%). The company has a significant
share of the shop and commercial facilities market, but low shares in office buildings, medical and welfare facilities, and factories
and work places, leaving ample scope to grow.
Sales growth rates by end user were up 6.6% YoY for office buildings, up 6.3% YoY for shops and commercial facilities, up 8.4%
YoY for medical and welfare facilities, up 5.6% YoY for factories and workplaces, and up 5.1% YoY for education facilities. Market
growth was strong for medical and welfare facilities and 5–6% for others (such as office buildings and commercial facilities).
Building maintenance market (by building use)
Residential
YoY

Non-residential

FY2018134.7

FY2019
151.5

7.4%

12.5%

3,860.5

4,124.8

YoY

6.8%

6.8%

Office buildings

875.4

933.2

YoY

Stores and commercial facilities
YoY

Educational facilities
YoY

Medical and welfare facilities
YoY

Factories and workshops
YoY

6.4%

6.6%

736.8

783.2

6.5%

6.3%

403.6

424.1

5.2%

5.1%

390.8

423.6

8.1%

8.4%

387.4

409.2

6.1%

5.6%

Source: Shared Research based on Yano Research Institute Ltd. materials (October 2020)

25/52

R

Aeon Delight / 9787

Coverage

LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Aeon group stores by format (domestic and overseas)
FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

590

598

617

618

625

626

584

583

612

613

1,537

1,708

1,977

2,038

2,121

2,130

2,159

2,166

2,228

2,288

GMS
Supermarket

FY02/21

Discount store

105

152

353

381

530

566

568

587

592

599

DIY store

122

123

122

121

120

119

122

122

120

118

Supercenter

29

26

26

29

28

28

28

27

25

25

Department store

1

1

1

1

1

1

1

1

1

1

Specialty store

4,121

4,462

4,581

4,683

5,061

4,348

4,332

4,039

3,801

3,519

Convenience store

3,424

3,664

3,853

Drugstore and pharmacy

3,932

4,331

5,261

5,436

5,449

5,350

5,300

3,347

3,765

3,980

4,376

4,817

2,392

2,599
1,252

Other retail formats

418

562

756

884

803

856

907

1,015

1,150

Financial services

460

527

641

698

701

705

690

640

658

636

Services

1,383

1,394

1,519

1,640

1,934

2,013

2,045

2,070

2,016

1,938

Total

12,19013,217

14,44018,382

20,02020,633

21,24821,516

18,945

18,888174

Aeon Mall

59

62

137

148

161

166

174

180

172

Aeon Town

107

115

122

130

134

138

139

140

145

Total

166

177

259

278

295

304

313

320

317

Source: Shared Research based on company data

Stores by Format in China, South Korea, and ASEAN region
FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

GMS

54

61

69

77

84

87

94

96

101

FY02/21
102

Supermarket

44

81

95

101

115

173

150

150

125

122

Discount store

-

22

23

24

24

23

21

22

22

22

Specialty store

2,033

2,294

2,370

2,532

2,840

2,998

3,172

3,252

3,353

3,315

7

10

Convenience store

37

55

61

42

44

52

54

39

5

0

Other retail formats

27

29

29

30

79

97

115

124

148

147

Financial services

236

279

302

339

339

342

324

276

295

269

Services

25

41

95

180

282

335

390

426

446

428

2,456

2,862

3,044

3,325

3,845

4,107

4,320

4,385

4,502

4,416

Drugstore

Total

Source: Shared Research based on company data

Customers
Aeon Delight generates almost 65% of its sales from the Aeon group companies, including Aeon Retail, Aeon Mall (TSE1: 8905),
and MaxValu companies. The remainder comes from non-Aeon group customers that include commercial facilities, offices, hotels,
medical facilities, schools, factories, warehouses, public facilities, and event operators.
Sales composition by customer(JPYbn)250.0

Aeon group
61.0%

64.4%

62.6%

61.4%

200.0
150.0
100.0

Aeon group ratio (RHS)

64.1%

65.8%

64.6%
195.8

192.5

187.5

179.0

162.9

160.6

160.3

Excluding Aeon group
64.4%

96.0

88.6

102.6

70%
60%

194.1

50%

134.1
85.7

62.9%

98.9

105.1

99.9

107.1

114.5

40%
30%
20%

50.0
0.0

10%
FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/200%

Source: Shared Research based on company data

Outside Japan, Aeon Delight seeks to reduce its reliance on the Aeon group to about 40%.
Plans for overseas openings of Aeon Malls(stores)
Overseas
China
ASEAN

FY02/2030
21
9

FY02/2335
22
13

FY02/26
52
29
23

Source: Shared Research based on Aeon Mall data

26/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Overseas businesses of the Aeon group
Overseas stores: Aeon Mall
Store
count

FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

2
2
-

3
3
-

5
4
1
1

9
6
3
2
1

-

1
1

1
1

2
2

17
12
5
3
1
1
6
6

19
13
6
4
1
1
1
1

24
17
7
4
1
2
5
4
1

27
19
8
4
2
2
3
2
1

30
21
9
5
2
2
3
2
1
1

32
21
11
6
2
3
1
1
1

Total
China
ASEAN
Vietnam
Cambodia
Indonesia

Openings

Total
China
ASEAN
Vietnam
Cambodia
Indonesia

FY02/22
Est.
34
22
12
6
2
4
2
1
1

1
1

Overseas stores: Aeon Retail1

FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

57
28
29

115
30
27
58

128
31
28
69

139
33
28
75
2

233
73
26
76
3
30
23
1
1

263
84
25
77
4
30
27
1
1
14
103
55
19
6
10
7
4
2

269
88
21
80
5
30
25
4
2
14
119
65
20
6
10
9
5
4

256
100
22
78
6
26
7
2
15
119
63
23
6
8
9
5
5

261
118
22
51
18
25
11
2
14
124
66
23
7
7
9
7
5

251
112
22
48
19
22
14
3
11
135
74
25
7
8
9
7
5

1

Name
ASEAN

Total
Malaysia
Thailand
Vietnam

ChihnaCambodia
Indonesia
Myanmar
Total

Aeon Malaysia
Aeon BiG Malaysia
Aeon Thailand
Aeon Vietnam
Aeon Citymart
Aeon Fivimart
Aeon Cambodia
Aeon Indonesia
Aeon Orange
Aeon Stores Hong Kong
Guangdong Aeon
Quingdao Aeon Dongtai
Aeon South China
Beijing Aeon
Aeon East China
Aeon Hubei

1

68
38
12
7
8
3

78
42
15
8
9
4

84
43
17
9
11
4

87
43
17
10
10
5
1
1

97
49
18
9
10
6
3
2

Source: Shared Research based on company data

Competition
Aeon Delight derives some 60–70% of its sales from the Aeon group. Within the group, Aeon Delight’s share in Aeon Retail isabout 80%. The company’s share in Aeon Mall is about 60%, while its share in MaxValu companies is between 60% and 70%.
Aeon Delight’s competitors include SECOM Co., Ltd. (TSE1: 9735) and Sohgo Security Services Co., Ltd. (TSE1: 2331) in security
services. It competes with Azbil Corporation (TSE1: 6845), Nippon Kanzai Co. Ltd. (TSE1: 9728), and Tokyu Community
Corporation (not listed) in property management services. There are no major competitors that offer cleaning services; Aeon
Delight competes with smaller, regional cleaning operators. In construction-related work, Aeon Delight competes with Azbil inthe environmental solutions business, while in the energy-saving business, major rivals are NTT Facilities, Inc. (not listed) and
Hitachi, Ltd. (TSE1: 6501).

Barriers to entry
Property management for residential and small office buildings has relatively low barriers to entry. However, the barriers are highfor large facilities given the comprehensive services required.
Smaller residential or office building owners are less concerned about having total package of services and usually focus oncleaning or security. However, large facilities require comprehensive services such as maintenance, cleaning, and security,
all-in-one. Instead of hiring a contractor for each service, large building owners prefer to contract out these services to one
company that is able to provide all of these services in package. Consequently, this enables Aeon Delight to enjoy a relatively
high barrier of entry in its market niche, namely servicing large retail stores and office buildings, due to its expertise in providing
an all-in-one package of services.
The company’s market share within the Aeon group is high. Being a group company, Aeon Delight is well aware of the businesspractices and facility characteristics that are common throughout the Aeon group and the risk of its competitors gaining asignificant portion of the market share is fairly slim.

27/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Financial Statements
Income statement
Income statement(JPYmn)FY02/13Cons.

FY02/14Cons.

FY02/15Cons.

FY02/16Cons.

FY02/17Cons.

FY02/18Cons.

FY02/19Cons.

FY02/20Cons.

FY02/21
Cons.

Sales

248,876 256,654 265,572 277,926 292,607 292,396 302,915 308,582 300,085
13.2%

3.1%

3.5%

4.7%

5.3%

-0.1%

3.6%

1.9%

-2.8%

218,648
30,227

223,40933,245231,281
34,290243,089
34,836

256,871
35,736

257,524
34,871

267,463
35,452270,01138,570262,910
37,175

5.6%
12.1%

10.0%
13.0%

3.1%
12.9%

1.6%
12.5%

2.6%
12.2%

-2.4%
11.9%

1.7%
11.7%

8.8%
12.5%

-3.6%
12.4%

SG&A expenses

16,326

18,622

18,90020,28021,596

21,961

22,421

22,56921,945YoY
SG&A ratio

9.8%
6.6%

14.1%
7.3%

1.5%
7.1%

7.3%
7.3%

6.5%
7.4%

1.7%
7.5%

2.1%
7.4%

0.7%
7.3%

-2.8%
7.3%

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,230

1.0%
5.6%

5.2%
5.7%

5.3%
5.8%

-5.4%
5.2%

-2.9%
4.8%

-8.7%
4.4%

0.9%
4.3%

22.8%
5.2%

-4.8%
5.1%

-9
13,892-22
14,60082
15,472-22
14,534124
14,263472
13,381

332
13,362-52
15,94938
15,268

0.8%
5.6%

5.1%
5.7%

6.0%
5.8%

-6.1%
5.2%

-1.9%
4.9%

-6.2%
4.6%

-0.1%
4.4%

19.4%
5.2%

-4.3%
5.1%

YoY

Cost of sales
Gross profit
YoY
Gross profit margin

Operating profit
YoY
Operating profit margin

Non-operating income (expenses)
Recurring profit
YoY
Recurring profit margin

Extraordinary gains (losses)

27-1,180

-665

-408

-174

-1,135-195-401-4,617

45.3%

46.1%

44.1%

46.0%

45.9%

42.9%

46.2%

38.3%

-8.6%

Net income

104
7,509

188
7,039

310
7,965

386
7,247

533
7,093

598
6,397

664
6,415

245
9,348

-110
11,680YoY
Net margin

8.6%
3.0%

-6.3%
2.7%

13.2%
3.0%

-9.0%
2.6%

-2.1%
2.4%

-9.8%
2.2%

0.3%
2.1%

45.7%
3.0%

24.9%
3.9%

Implied tax rate
Net income attrib. to non-controlling interests

Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

28/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Balance sheet
Balance sheet(JPYmn)ASSETSCash and deposits
Accounts receivable
Allowance for doubtful accounts
Inventories
Deposits for consumption to subsidiaries and affiliates

Other current assets
Total current assets
Buildings
Facilities and equipment for area management

Tools, furniture, and fixtures
Land
Construction in progress
Other fixed assets
Total tangible fixed assets
Goodwill
Other
Total intangible fixed assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Investments and other assets
Total fixed assets
Total assets
LIABILITIES
Accounts payable
Short-term debt
Other
Total current liabilities
Long-term debt
Other
Total fixed liabilities
Total liabilities
Capital stock
Capital surplus
Retained earnings
Treasury stock
Other comprehensive income
Share subscription rights
Non-controlling interests
Total net assets
Working capital
Total interest-bearing debt
Net cash
Shareholders's equity
Equity ratio

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

10,014
44,673-144
2,237
18,0204,523
79,323
1,089
274
2,079
282
72
3,796
10,801
1,520
12,321
2,973
288
2,196
-200
5,257
21,375
100,699
24,544
10
10,401
34,955
5
1,190
1,195
36,151
3,238
18,77040,539
-458
992
205
1,260
64,54722,36615
28,01963,082
62.6%

12,56534,448-290
2,575
32,4208,196
89,914
1,046
238
2,487
278
209
4,258
9,399
1,609
11,008
3,897
254
1,877
-199
5,829
21,096
111,010
21,876
5
12,62239,3091,556
1,556
40,865
3,238
18,81845,112
-449
1,711
165
1,547
70,145
15,147
5
44,98068,433
61.6%

15,58035,757-168
2,663
41,3268,476
103,634
1,009
211
2,516
278
345
4,361
8,452
1,867
10,320
3,768
284
2,750
-535
6,268
20,950124,584
24,934
15,771
46,6392,387
2,387
49,026
3,238
18,85050,505
-443
1,373
166
1,869
75,55813,48656,90673,52359.0%

20,38634,328-360
2,840
37,362
9,634
104,190
1,629
190
2,651
1,978
610
7,061
7,654
2,352
10,006
4,463
310
3,896
-494
8,176
25,244
129,434
28,457
17,37745,834
3,925
3,925
49,7603,238
18,86255,099
-441
525
221
2,168
79,674
8,711
57,74877,28559.7%

31,71735,360-202
3,218
31,713
9,292
111,098
1,631
175
3,307
1,975
1,974
9,064
6,813
1,989
8,802
4,546
551
4,342
-536
8,904
26,772
137,870
25,114271
21,66647,051
293
5,921
6,214
53,266
3,238
18,94959,355
-436
799
263
2,434
84,604
13,464564
62,866
81,90759.4%

39,53635,739-130
2,623
32,0008,543
118,311
1,582
4,892
1,975
1,591
10,041
6,113
1,699
7,813
5,334
330
3,458
-610
8,512
26,367
144,678
25,820225
18,54149,0606,474
6,474
55,535
3,238
19,01962,756
-430
1,484
303
2,773
89,143
12,542
225
71,311
86,06759.5%

44,23340,089-167
2,211
16,0006,405
108,771
1,479
5,064
2,032
1,585
10,161
6,865
1,338
8,103
4,256
412
3,264
-355
7,578
25,842
134,61425,967394
20,13751,408
15
7,652
7,667
59,075
3,238
13,88865,910-10,327
466
299
2,062
75,53916,333409
59,82473,17854.4%

62,35542,612
-242
1,822
5,815
112,362
1,458
4,846
2,032
1,334
9,671
5,975
1,209
7,185
3,623
1,763
2,347
-36
7,698
24,554
136,917
23,388252
20,41048,864
11
6,756
6,767
55,631
3,238
13,88072,063-10,208
-86
186
2,213
81,286
21,046263
62,09278,887
57.6%

59,77339,176
-212
2,006
9,265
110,008
1,671
4,264
2,000
1,545
9,481
3,938
1,579
5,518
3,960
4,840
2,766
-11
11,55726,556
136,565
22,170299
17,46644,123
4,160
4,160
48,283
3,238
13,22680,344-10,123
662
119
814
88,281
19,012299
59,47487,34864.0%

Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

AssetsIn order of value, the company’s assets are cash and deposits (JPY62.4bn, FY02/20), accounts receivable (JPY42.6bn), tangible
fixed assets (JPY9.7bn), and intangible fixed assets (JPY7.2bn). The aggregate of cash and deposits and deposits for consumption
from associates is over JPY60.0bn, but interest-bearing debt is just JPY300mn, for a cash-rich balance sheet. Tangible fixed assets
and intangible fixed assets are small as the company’s business structure does not require a large balance sheet. In FY02/20 thecompany ended its policy of leaving deposits with Aeon, from a cash governance perspective.
Majority of its investment securities are with Aeon Mall (TSE1: 8905), Aeon Kyushu (TSE JASDAQ: 2653), Aeon Fantasy (TSE1:4343), and MaxValu companies.

29/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Shareholders’ equity
At end-FY02/20, the equity ratio was 57.6%. Although it declined to 54.4% at end-FY02/19 following the restatement ofprior-year earnings accompanying the Kajitaku accounting fraud, it subsequently recovered.

Profitability and financial ratios
Profit margins(JPYmn)Gross profit

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

FY02/21Cons.

30,22733,24534,29034,83635,73634,87135,452

38,57037,175Gross profit margin

12.1%

13.0%

12.9%

12.5%

12.2%

11.9%

11.7%

12.5%

12.4%

Operating profit

13,901

14,622

15,39014,556

14,13912,90913,03016,001

15,230Operating profit margin

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

5.2%

5.1%

16,13817,054

17,856

17,014

16,92816,03816,391

19,16818,458

EBITDA margin

6.5%

6.6%

6.7%

6.1%

5.8%

5.5%

5.4%

6.2%

6.2%

Net margin

3.0%

2.7%

3.0%

2.6%

2.4%

2.2%

2.1%

3.0%

3.9%

ROA (RP-based)

14.4%

13.8%

13.1%

11.4%

10.7%

9.5%

9.6%

11.7%

11.2%

ROE

12.5%

10.7%

11.2%

9.6%

8.9%

7.6%

8.1%

12.3%

14.1%

2.6

2.4

2.3

2.2

2.2

2.1

2.2

2.3

2.2

W orking capital

22,36615,147

13,486

8,711

13,464

12,542

16,33321,046

19,012Current ratio

226.9%

228.7%

222.2%

227.3%

236.1%

241.2%

211.6%

229.9%

249.3%

Quick ratio

207.6%

201.3%

198.3%

200.1%

209.5%

218.4%

194.8%

214.3%

223.8%OCF / Current liabilities-12.7%

57.5%

40.1%

22.3%

25.2%

28.2%

24.6%

14.7%

22.4%

OCF / Total liabilities-12.1%

52.3%

35.2%

20.7%

22.0%

24.4%

20.9%

13.2%

21.5%

Cash conversion cycle (days)

18.5

22.3

15.4

10.1

9.7

12.4

13.6

18.3

20.8

Change in working capital

13,319-7,219-1,661-4,775

4,753

-922

3,791

4,713

-2,034

EBITDA

Financial ratios

Total asset turnoverSource: Shared Research based on company data

30/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Statement of cash flows
Cash flow statement

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21(JPYmn)Cash flows from operating activities (1)Pre-tax profit
Depreciation
Impairment losses
Amortization of goodwill
Change in working capital
Income taxes
Other

Cons.
-4,35813,9201,130
1,107-13,728-6,578-209

Cons.
21,35913,420
1,294
678
1,138
10,386-6,114557

Cons.
17,234
14,807
1,341
578
770
2,008
-6,615
4,345

Cons.
10,303
16,526
1,699
250
759
-552
-6,336-2,043

Cons.
11,70314,089
2,069
122
720
449
-6,602856

Cons.
13,56812,247
2,414
39
715
1,035
-6,1153,233

Cons.
12,373
13,166
2,602
123
759
-53
-5,188
964

Cons.
7,371
15,548
2,352
175
815
-4,745-6,506-268

Cons.
10,403
10,651
2,427
1,659
801
-1,831-4,838
1,534

Cash flows from investing activities (2)7,086-16,632-11,365-3,2552,233-2,666

12,256

13,838-7,325-1,607-1,999-1,903-2,414-4,113-3,228-2,059-2,361-2,469Proceeds from sale of intangible and tangible fixed
assets

147

41

18

116

24

14

15

-

39

Acquisition of shares in subsidiaries affecting thescope of consolidation

-694

-388

-

-4,771---1,516---170,520
180,020-260
2,728-212,400
198,000
114
4,727-220,511
211,605-574
5,869-218,798
222,762-150
7,048-229,151
234,800
673
13,936-250,400
250,113835
10,902-284,000
300,000-184
24,629-192,500
208,500
199
21,209-31,000
31,000-4,895
3,078-2,257-2,475-2,594-2,821-2,400-3,264-19,686-3,392-5,324-25-6-2,2562-2,46457-2,57337-2,67614219
324-2,84228-28
90-2,99641

179-2-3,259-9,906-143-3-3,195109

60-14-3,397
-

-

-

-

-

-57

-21

-6,458--1,853

28

-68

-58

-159

-72

-350

-240

-160

-120

26
497
9,676

99
2,351
12,028172
3,447
15,476-229
3,997
19,473-6
11,53031,00480
7,718
38,722-228
4,715
43,437-98
17,71961,15132-2,21458,937Purchase of intangible and tangible fixed assets

Pay ments of deposit for consumption to subsidiaries and affiliates
C ollection of deposit for consumption from subsidiaries and affiliates

Other
Free cash flow (1+2)
Cash flows from financing activities
Net change in short-term borrowings
Net change in long-term borrowings
Payment of dividends
Acquisition of treasury stock
Acquisition of shares in subsidiaries not affecting
the scope of consolidation
Other
Other
Change in cash and cash equivalent
Cash and cash equivalent (year-end)
Source: Shared Research based on company data
Note: The company restated prior-year results in June 2019.

Cash flows from operating activities
Cash flows from operating activities for the company are mainly from net income before tax, depreciation, goodwill amortization,and changes to working capital. Fluctuations are comparatively small as the company runs a large proportion of recurring
revenue type businesses.

Cash flows from investing activities
Annual spending on acquiring tangible and intangible fixed assets is about JPY3.0bn, small compared to operating cash flow.
Because the company is relatively aggressive in acquisitions, in some years there is a significant increase in share purchases. On
the surface, cash flows from investing activities mainly vary with funds deposited at Aeon.

Cash flows from financing activities
The main element in the company’s financing cash flows is dividend payments. There were significant outflows in FY02/19
including JPY9.9bn to buy back the company’s shares and additional amounts to make consolidated subsidiaries fully owned.
Cash conversion cycle (days)
Accounts receivable turnoverDays in accounts receivable
Inventory turnover

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

6.6

6.5

7.6

7.9

8.4

8.2

8.0

7.5

FY02/21
7.3

55.7

56.3

48.2

46.0

43.5

44.4

45.7

48.9

49.7
137.4

116.2

92.9

88.3

88.3

84.8

88.2

110.7

133.9

Days in inventory

3.1

3.9

4.1

4.1

4.3

4.1

3.3

2.7

2.7

Accounts payable turnover

9.1

9.6

9.9

9.1

9.6

10.1

10.3

10.9

11.5

Days in accounts payable

40.3

37.9

36.9

40.1

38.1

36.1

35.3

33.4

31.6

Cash conversion cycle (days)

18.5

22.3

15.4

10.1

9.7

12.4

13.6

18.3

20.8

Source: Shared Research based on company data

Accounts receivable are mainly from Aeon group companies, while accounts payable are with various suppliers, such as soft drink
beverage suppliers.
31/52

R

Aeon Delight / 9787

Coverage

LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

ROE and dividends(JPYmn)ROE
Net margin
Total asset turnover
Financial leverage (equity multiplier)
ROA (RP-based)
ROIC
NOPAT
Interest-bearing debt＋Net assets
ROIC (before tax)
Operating profit margin
Sales / Invested capital

FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

Cons.
12.5%
3.1%
2.48
1.61
15.5%
14.7%
8,162
55,590
24.8%
6.3%
3.95

Cons.
12.5%
3.0%
2.57
1.61
14.4%
13.4%
8,245
61,400
22.6%
5.6%
4.05

Cons.
10.7%
2.7%
2.42
1.61
13.8%
13.5%
9,064
67,356
21.7%
5.7%
3.81

Cons.
11.2%
3.0%
2.25
1.66
13.1%
13.1%
9,540
72,854
21.1%
5.8%
3.65

Cons.
9.6%
2.6%
2.19
1.68
11.4%
12.1%
9,368
77,616
18.8%
5.2%
3.58

Cons.
8.9%
2.4%
2.19
1.68
10.7%
11.5%
9,464
82,421
17.2%
4.8%
3.55

Cons.
7.6%
2.2%
2.07
1.68
9.5%
10.2%
8,925
87,268
14.8%
4.4%
3.35

Cons.
8.1%
2.1%
2.17
1.75
9.6%
10.9%
9,040
82,658
15.8%
4.3%
3.66

Cons.
12.3%
3.0%
2.27
1.79
11.7%
14.1%
11,10178,749
20.3%
5.2%
3.92

Cons.
14.1%
3.9%
2.19
1.65
11.2%
12.4%
10,56785,065
17.9%
5.1%
3.53

ROE
20%

15%

10%

ROE
14.7%

12.5%

13.4%

13.5%

12.5%
10.7%

ROA (RP-based)

FY02/12

FY02/13

FY02/14

ROE

30%

14.1%

14.1%

13.1%

12.1%

11.5%

10.9%

10.2%

9.6%

FY02/15

FY02/16

8.9%

Net margin

FY02/17

12.4%

12.3%

11.2%

5%

0%

ROIC

7.6%

8.1%

FY02/18

FY02/19

Total asset turnover (RHS)

FY02/20

FY02/21

Financial leverage (RHS)

3

25%
20%

1.6

1.6

12.5%

12.5%

1.6

1.7

10.7%

11.2%

1.7

1.7

1.8

1.8

1.7

2

1.6

15%
10%

12.3%
9.6%

8.9%

5%
0%

3.1%

FY02/12

3.0%

2.7%

3.0%

2.6%

FY02/13

FY02/14

FY02/15

FY02/16

2.4%

FY02/17

14.1%

1

8.1%

7.6%
2.2%

3.0%

2.1%

FY02/18

FY02/19

FY02/203.9%

0FY02/21

ROIC
30%

ROIC (before tax)

OPM

9Total sales / Invested capital (RHS)

8

25%

7
6

20%

5

15%
10%
5%
0%

4.0

4.1

4
3.8

3.6

3.6

3.6

3.4

5.6%

5.7%

5.8%

5.2%

4.8%

4.4%

4.3%

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/193.9

FY02/12(JPYbn)Net assets

13.8

13.9

14.6

15.4

Interest-bearing debt

5.1%

FY02/20

FY02/21

14.1

12.9

0
(JPYbn)Operating profit (RHS)

20
16.0

14.6

1

5.2%

15.2

16

13.0

60

12

40
58.2

64.5

70.1

75.6

79.7

84.6

89.1
75.5

81.3

88.3

20
0

3

3.5

2
6.3%

100
80

3.7

8
4

FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/210

Source: Shared Research based on company data

32/52

R

Aeon Delight / 9787

Coverage

LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Dividends(JPYmn)Total dividends
Total treasury stock acquired
Total returns to shareholders

FY02/12Cons.

FY02/13Cons.

FY02/14Cons.

FY02/15Cons.

FY02/16Cons.

FY02/17Cons.

FY02/18Cons.

FY02/19Cons.

FY02/20Cons.

FY02/21
Cons.

d)

2,097
6
2,103
6,912

2,413
1
2,414
7,509

2,519
1
2,520
7,039

2,625
1
2,626
7,965

2,731
2,731
7,247

2,890
2,890
7,093

3,207
1
3,208
6,397

3,114
9,906
13,020
6,415

3,246
3,246
9,348

4,099
4,099
11,680a) / d)c) / d)

30.3%
30.4%

32.1%
32.1%

35.8%
35.8%

33.0%
33.0%

37.7%
37.7%

40.7%
40.7%

50.1%
50.1%

48.5%
203.0%

34.7%
34.7%

35.1%
35.1%

57,46463,082

68,43373,52377,285

81,90786,06773,17878,88787,348f)

55,101

60,27365,75870,97875,404

79,596

83,987

79,62376,033

83,11857,46463,082

68,43373,52377,285

81,90786,06773,17878,88787,348

131.8
40.0
3.8%

143.2
46.0
4.0%

134.2
48.0
3.8%

151.7
50.0
3.7%

138.0
52.0
3.6%

135.0
55.0
3.6%

121.7
61.0
3.8%

122.9
63.0
3.9%

187.2
65.0
4.3%

233.7
82.0
4.9%

a)
b)
c) = a) + b)

Net income attributable to parent company sh

Dividend payout ratio
Total shareholder return ratio
Net assets available to common
Average of beginning andend of year
Before deducting assets
available to holders of ClassEPSDividend per share
Dividend on equity ratio

(JPY)
(JPY)
a) / f)250%

Payout ratio

Total shareholder return ratio6%

DOE (RHS)

5%

200%

4%

150%

3%
100%

2%

50%
0%

1%
FY02/12

FY02/13

FY02/14

FY02/15

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/210%

Source: Shared Research based on company data

Shareholder returns
The company said that it pays dividends with a standard payout ratio of 35% based on its basic stance on capital policy. In
FY02/19, it spent JPY9.9bn to buy back its own shares.

Aeon Delight’s stance on capital policy▷

The company will use proactive investments to achieve sustainable growth. It will work to boost shareholder value in thelonger term and increase returns to shareholders as the company grows. Further, the company views return on equity (ROE) as
an important benchmark of capital efficiency, and is currently aiming at a level of 12%.

▷The company will place importance on the balance in the distribution of annual profit between growth investments andshareholder returns and has a standard stable dividend payout ratio of 35%.

33/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Other information
History
Date

Description

April
February
September

1973
1976
2006

November
October
April
September
April
May
December

2007
2008
2009
2010
2011

March
August2012

October
October
December
DecemberJanuary
July
November

2013

December
March
December

2015
2016

March
April

2017

June
April

2018

May
November
DecemberFebruary

2020

Nichii Japan Development Co., Ltd. established in Higashi, Osaka
Changed name to Japan Maintenance Co., Ltd., following absorption-type merger with Nichii Maintenance Co., Ltd.
Following absorption-type merger with Aeon Techno Service Co., Ltd., Japan Maintenance changed name to Aeon
Delight Co., Ltd.
Wholly owned subsidiary Aeon Delight (Beijing) Co., Ltd. (now Aeon Delight (China) Co., Ltd.) established
Acquires 40% of shares in Kankyouseibi Co., Ltd. (Utsunomiya, Tochigi) and made it affiliate
Acquires 40% of shares in Do Service Co., Ltd. (Nishinari, Osaka) and made it affiliate
Absorption-type merger with Certo Corp., supplier of vending services to business supply companies
Acquires 90% of shares in Kajitaku Inc. (Chuo, Tokyo) and made it subsidiary
Acquired additional shares in A to Z Service Co., Ltd. (Shinjuku, Tokyo) and made it subsidiary
With 70% stake, established joint venture FMS Solution Co., Ltd. (Mihama, Chiba) with Vinculum Japan Corporation(now VINX Corp.)
Established wholly owned subsidiary, Aeon Delight (Malaysia) Sdn. Bhd.
Aeon Delight (Beijing) Co., Ltd. (now Aeon Delight (China) Co., Ltd.) and Tianjin Teda Co., Ltd. established joint
venture, Aeon Delight (Tianjin) Co., Ltd.
Acquired 53.7% of shares in General Services, Inc. (Chiyoda, Tokyo) and made it subsidiary
Acquired 54.9% of shares in Aeon Compass Co., Ltd. (Mihama, Chiba) via third-party allocation and made it subsidiary
Established A-Life Support Co., Ltd. (Chuo, Tokyo) a 85.8% owned joint venture with Familynet Japan Corporation
Acquired 51% of shares in Aeon Delight Sufang (Suzhou) Comprehensive Facility Management Service Co., Ltd. (nowAeon Delight (Jiangsu)) and made it subsidiary
Established wholly owned subsidiary Aeon Delight (Vietnam) Co., Ltd.
Acquired 51% of shares in Wuhan Xiaozhu Comprehensive Facility Management Service Co., Ltd. and made it subsidiary
Established Kikugawa-Ishiyama Solar Co., Ltd. (Kikugawa, Shizuoka), a 37% owned joint venture with Recycle One Co.,
Ltd. (now Renova, Inc.) and one other partner; Kikugawa-Horinouchiya Solar Co., Ltd., a 37% owned joint venturewith Recycle One and two other partners
Acquired shares in Hakuseisha Co., Ltd. (Chiyoda, Tokyo) via tender offer and made it subsidiary
Acquired remaining VINX Corp. stake in FMS Solution Co., Ltd. via tender offer and made it wholly owned subsidiary
Acquired remaining Familynet Japan Corporation stake in A-Life Support Co., Ltd. in September 2016, and conductedabsorption-type merger
Established wholly owned subsidiary Aeon Delight (Shanghai) Management Co., Ltd.
Wuhan Xiaozhu Comprehensive Facility Management Service Co., Ltd. established wholly owned subsidiary Wuhan
Xiaozhu Hotel Management Service Co., Ltd.
Absorption-type mergers with FMS Solution Co., Ltd. and Aeon Delight Seres Co., Ltd.
Established Aeon Delight DeepBlue Technology (Shanghai) Co., Ltd., a 65% owned joint venture with DeepBlue
Technology Co., Ltd.
Acquired 100% of shares in U-COM Co., Ltd. (Minato, Tokyo) and made it subsidiary
Acquired additional shares in Aeon Delight (Jiangsu) Comprehensive Facility Management Service Co., Ltd. and Wuhan
Xiaozhu Comprehensive Facility Management Service Co., Ltd., and made them wholly owned subsidiaries
Acquired 90% of shares in PT Sinar Jernih Sarana, and made it subsidiary
Conducted incorporation-type company split of Kajitaku's housework support business, which was transferred to Aqutia
Co., Ltd., a newly established wholly owned subsidiary

Source: Shared Research based on company data

Major shareholders
Top shareholders
Aeon Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)
Aeon Delight Business Partners Stockholding Association
Custody Bank of Japan, Ltd. (Trust account)Northern Trust Company AVFC Re Fidelity Funds
Aeon Delight Employees Stockholding Association
Clearstream Banking S.A.
Custody Bank of Japan, Ltd. (Trust account 9)
The Nomura Trust and Banking Co., Ltd.
The Bank of New York Mellon 140051

Shares held('000)
27,613
1,999
1,127
1,009
801
497
495
484
456
401

Shareholding
ratio
55.2%
4.0%
2.3%
2.0%
1.6%
1.0%
1.0%
1.0%
0.9%
0.8%

Source: Shared Research based on company data
(As of end-February 2021)

34/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Corporate governance
Organizational formand capital structure
Directors

Audit & Supervisory
Board

General shareholders meeting
Voting platform
Investor relations

Other

Organization
Company with Audit & Supervisory Board
Controlling shareholders
None
Parent company ticker
Aeon Co., Ltd. 8267
Number of directors (per Articles of Incorporation)20
Directors' term of office (per Articles of Incorporation)
1 yearNumber of directors
6Outside directors
3
Independent outside officers
3
Existence of Audit & Supervisory Board
Y
Number of members of Audit & Supervisory Board (per Articles of Incorporation)
5
Number of members of Audit & Supervisory Board
4
Outside members
2
Independent outside officers
1
Participation to electronic voting platformY
Preparation of convening notices in English
Y Disclosed online
Corporate disclosure policy
Y Disclosed online
Regular briefings for individual investors
Y
Briefings by representative directors
Y
Regular briefings for analysts and institutional investors
Y
Online access to IR documents
Y Disclosed online
Dedicated IR section and/or staff
Y
Foreign shareholding ratio (as of May 2020)
20–30%
Independent officers
4Implementation of measures regarding director incentives
Stock option plan in place
Disclosure of individual director's compensation
None
Policy to determine amount and calculation method of remuneration
Y
Corporate takeover defenses
None

Source: Shared Research based on company data

Top management
President and CEO: Kazumasa Hamada (born in 1964) joined Jusco Co., Ltd. (currently Aeon Co., Ltd.) in 1987. Appointed ashead of management planning department, Posful Corp. (currently Aeon Hokkaido Corp.) in 2006 and executive officer in 2007;
regional office manager of Hokuriku, Shinetsu Regional Company in February 2011 and executive officer in March that year. In
2013 he was appointed director and control & accounting officer of Aeon Co., Ltd. In 2015, he was named regional officemanager of Kitakanto and Niigata Company of Aeon Retail Co., Ltd. and director and senior managing officer of Aeon Retail. In
2017 he became senior managing executive officer at Aeon Retail. In March 2018 he was dispatched to Aeon Delight Co., Ltd. as
an advisor, before being appointed to his current position as president and CEO of Aeon Delight in May 2018. In December 2018he was appointed representative commissioner at PT Sinar Jernih Sarana. In June 2019 he was appointed chief administrative
officer, head of business administration division, and head of finance division of Aeon Delight.

Employees
At end-FY02/21, Aeon Delight had 20,117 employees (22,062 at end-FY02/20) and an average of 7,191 temporary employees(7,459 at end-FY02/20) on a consolidated basis. At the parent level, there were 4,118 employees (4,074 at end-FY02/20) and
2,915 temporary employees (2,847 at end-FY02/20). In FY02/21, the average age, average length of employment, and averageannual salary on a parent basis were as follows:▷

Average age: 46.1 years▷

Average length of employment: 11.8 years▷

Average annual salary: JPY4.7mn (FY02/20)

In the Aeon group, the Aeon Delight Union (3,074 members in FY02/20) has been organized and belongs to the Aeon DelightLabor Union and the Japanese Federation of Textile, Chemical, Food, Commercial, Service and General Workers' Unions (UAZENSEN）. The Aeon group adopts a union shop system.
Union shop system: Under this system, an employer requires its employees to join a union within a certain period of
35/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

employment. If an employee does not join the union, withdraws from the union, or is expelled from the union, the employer isobliged to dismiss the employee. Unlike a closed shop system that employs only union members, the union shop system does
not require employees to join a union in order to be hired. On the other hand, an open shop system does not require union
membership of employees, leaving it up to their free will.

Investor relations
Aeon Delight holds earnings briefings twice a year (following half-year and full-year business results).

By the way
Corporate Social Responsibility (CSR) Activities
Aeon Delight is pursuing corporate social responsibility (CSR) activities by strengthening its efforts to protect the environment
with a management principle of creating “environmental value” for clients.
The following are examples of the company’s environmental initiatives:

Promotion of energy-saving lighting equipment
The company is promoting energy-saving lighting devices, such as light emitting diode (LED) lamps, that significantly reduce
electricity consumption. The company seeks to help clients cut carbon dioxide emissions and reduce expenses by selecting themost suitable source of lighting depending on the situation and intended use, such as lighting for room interior or a parking
space, and for illuminating a billboard.

Proposal for environmentally friendly packaging
The company proposes a variety of packaging materials, including biomass materials obtained during the growth process ofplants that do not increase carbon dioxide when burned, as well as water-based gravure printing that has low environmental
impact.

Introduction of environmentally friendly vending machines
The company introduced environmentally friendly vending machines that can reduce electricity consumption by as much as 45%
a year with the use of heat pumps and LED lighting. The company unveiled heat-pump vending machines in 2008, and thoseequipped with LED lighting in 2011.

Participation in Aeon 1% Club
Aeon 1% Club supports projects to protect the environment, boost international cultural and human exchange, promote regional
cultural and social activities, and donate to welfare projects. It is an initiative under which group companies contribute 1% of
their pretax profits so that these activities can be maintained regardless of the companies’ business performances.

Tree planting through Aeon Environmental Foundation
The company participated in a tree-planting event in Beijing, China in fiscal year 2010, took part in a similar project in Jakarta,
Indonesia in fiscal year 2011 and 2012, respectively. For the tree planting event in Jakarta held during fiscal year 2012, thecompany sponsored participation of endorsing companies, in addition to having its employees from Japan volunteering for the
event“Clean Day” on the 11th Day of Each Month
The company designated the 11th day of each month as “Clean Day,” where employees clean streets around their workplaces
before the start of the working day.
The company also conducts a number of social contributions as part of its CSR activities:

36/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Volunteering at social welfare facilities
The company conducts volunteer activities at nationwide welfare facilities once a year, using the system of the Aeon Social
Welfare Foundation.

Shopping basket cleaning outsourced to vocational aid facilities
The company outsources cleaning of its shopping baskets to vocational aid centers. Shopping baskets used at its stores are sent
to six “washing centers” within the vocational facilities, where the baskets are washed and applied with anti-bacterial coating.

Construction of a school in Laos (completed in June 2008)
The Aeon Delight group conducted fund raising activities, and through the Aeon 1% Club and the Japan Committee for UNICEF,
constructed and donated a school in Laos named “Aeon Good-Job School.”
In addition, Aeon Delight’s logo is a mascot named “Gu Jo-Kun,” derived from “a good job!” and symbolizes that the company
wishes to make all people happy.

37/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Historical financial statements and news
Historical financial statements
Full-year FY02/21 results (out April 9, 2021)
Summary▷In FY02/21, Aeon Delight reported consolidated sales of JPY300.1bn (-2.8% YoY), operating profit of JPY15.2bn (-4.8% YoY),
and net income of JPY11.7bn (+24.9% YoY). Sales and profit fell as some contracted facilities were partially closed or
temporarily shut down, events were canceled, and people refrained from going out due to the impact of the COVID-19
pandemic. Sales and operating profit, which were severely affected in 1H in particular, failed to match the record highs of
FY02/20. While assessing the pandemic’s impact, the company implemented initiatives to capture demand for disease
prevention measures, for example by introducing “new standard cleaning” based on standards for the with-COVID era.
Looking at sales by quarter, we can see a steady recovery trend, since sales were -7.0% YoY in Q1, but then -2.8% YoY in Q2,-0.7% YoY in Q3, and -0.3% YoY in Q4. Operating profit was -9.1% YoY in Q1 and -15.6% YoY in Q2, but +5.8% YoY in Q3 and+3.1% YoY in Q4. Aeon Delight says that the pandemic’s negative impact of JPY1.5bn on operating profit was in line with its
initial estimate. Against this backdrop, the company worked to reduce SG&A expenses through productivity improvements,
the introduction of area management to aid labor-saving and unmanned management of facilities, and organizational
restructuring to improve management efficiency (such as streamlining and integration of subsidiaries). As a result, OPM
improved from 4.9% in 2H FY02/20 to 5.1% in 2H FY02/21, and the infrastructure for the next stage of growth has been put inplace. Net income hit a record high, due in part to a reduced tax burden, so the annual dividend was JPY82.0 per share(dividend payout ratio of 35.1%), up from an initial projection of JPY70.0 per share.

▷

In Q4, sales were JPY75.7bn (-0.3% YoY) and operating profit was JPY4.0bn (+3.1% YoY), marking another YoY increase at theoperating level following Q3.

▷

The company’s forecast for FY02/22 is sales of JPY325.0bn (+8.3% YoY), operating profit of JPY16.5bn (+8.3% YoY) and net
income of JPY10.5bn (-10.1% YoY). The EPS forecast is JPY210.0 and the annual dividend forecast is JPY84.0 per share(including commemoration dividend of JPY10 per share). Sales and operating profit are expected to reach record highs: thenegative impact of COVID-19 on operating profit is expected to fall to JPY500mn from JPY1.5bn in FY02/21, and sales are
expected to benefit from initiatives to secure new customers, as well as boost revenue from existing customers, and measures
to improve profitability.

▷

The company updated its Aeon Delight Vision 2025 plan published in October 2018 and announced new targets alongside
the publication of FY02/21 results. There is no change to the fundamental strategy of being a company that createsenvironmental value and contributes to solving social issues, with a three-pronged growth strategy in Asia that addresses safety
and security, manpower shortage, and the environment. The company aims to achieve sales of JPY471.0bn (CAGR of 9.4%),
operating profit of JPY37.0bn (CAGR of 19.4%), and ROE of over 15% in FY02/26 (FY02/21 ROE was 14.1%). (The previous
targets were sales of JPY525.0bn and operating profit of JPY48.0bn.) Growth drivers for the business are sales expansion
outside the Aeon group, structural reforms, and M&A. The company plans to achieve sales of JPY361.0bn and operating profitof JPY22.0bn in FY02/24, and aims for a dividend payout ratio of 40%.

Results by segment
Facilities Management
In the Facilities Management segment, sales were JPY58.2bn (-0.1% YoY) with segment profit of JPY5.2bn (-2.2% YoY). Sales andprofits declined as a result of the drop in sales in 1H due to COVID-19 (sales and profits increased in 2H).
38/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

In Q4, the segment posted sales of JPY14.4bn (+2.6% YoY) and segment profit of JPY1.3bn (+0.4% YoY). Sales declined YoY in Q1
and Q2 with the impact of the pandemic, but rose YoY from Q3 onward with a reduced pandemic impact and contributions fromnew contracts. The increase in new customers and capture of ventilation and air conditioning demand led to higher sales, while afocus on area management to improve profitability led to progress on business model reform.

Security Services
The Security Services segment reported sales of JPY44.4bn (-0.6% YoY) and segment profit of JPY3.3bn (+8.9% YoY). Amid aworker shortage in recent years, the company continued to streamline its business by automating systems to handle routine tasks
such as facility entry/exit management and store closings. Profitability improved as a result of initiatives to optimize unit prices
through price negotiations.
Q4 sales were JPY11.4bn (+0.7% YoY) and segment profit was JPY920mn (+10.7% YoY). The profit margin increased due toautomation of store closings and other efforts to improve efficiency, reduce manpower, and mechanize operations.

Cleaning Services
The Cleaning Services segment reported sales of JPY62.5bn (+0.2% YoY) and segment profit of JPY7.3bn (+5.1% YoY). The
company stepped up proposals to expand the rollout of “new standard cleaning” in the with-COVID era and focused on training
specialists in cleaning for epidemic prevention. Profitability improved as a result of efforts to improve profitability of poorly
performing properties and share successful workplace case studies.
Q4 sales were JPY16.4bn (+3.4% YoY) and segment profit was JPY2.0bn (+18.4% YoY). Growth in new contracts, emergency
disinfection work prompted by the pandemic, and the rollout of “new standard cleaning” all contributed to higher sales YoY fromQ3 onward. OPM improved due to an increase in highly profitable cleaning for disease prevention, rising 0.8pp YoY in Q3 and1.5pp YoY in Q4.

Construction Work
The Construction Work segment reported sales of JPY40.7bn (-2.8% YoY) and segment profit of JPY3.9bn (+1.7% YoY). Although
there was an increase in contracts for various construction work, sales declined due to delayed starts for some projects due to the
COVID-19 pandemic. Profit grew YoY, however, as profitability improved thanks to cost reductions, with improved accuracy forwork estimates and a more standardized approach to procurement.
Q4 sales were JPY9.6bn (-1.9% YoY), and segment profit was JPY1.0bn (+2.9% YoY). The company could not compensate for areactionary decline from the large orders received in Q4 FY02/20 and sales fell YoY, but OPM has improved due to continued
improvement in the accuracy of estimates calculated when receiving orders.

Materials and Supplies Sourcing Services
The Materials and Supplies Sourcing Services segment reported sales of JPY53.1bn (+3.8% YoY) and segment profit of JPY2.5bn(-0.9% YoY). Sales grew on orders for products to prevent the spread of COVID-19 (such as commercial-grade masks, gloves,alcohol, and acrylic screens to prevent droplet spread), as well as orders for Aeon’s TOPVALU private brand packaging materials.
Despite lower purchasing costs achieved through economies of scale and improved distribution efficiency, profit declined, hurt
by factors such as the new charge for checkout bags starting in July 2020.
Q4 sales were JPY13.4bn (+6.7% YoY), and segment profit was JPY616mn (+13.4% YoY).

Vending Machine Services
The Vending Machine Services segment reported sales of JPY25.5bn (-19.3% YoY) and segment profit of JPY653mn (-53.2% YoY).
Beverage sales fell sharply due to temporary closure of commercial facilities where vending machines are installed. Although thecompany installed more of its own multibrand vending machines (which offer products from a number of different brands) toimprove profitability per unit, this was not sufficient to compensate for lower sales.
39/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Q4 sales were JPY6.4bn (-17.8% YoY), and segment profit was JPY90mn (-79.9% YoY). In addition to a decrease in sales, expenses
increased. As part of anti-COVID measures, the company strengthened support for settlement using QR codes. This improved
convenience and safety. The company also enhanced safety by applying antimicrobial film to buttons, pickup ports, and otherplaces users may touch. Such efforts to ensure vending machine users have peace of mind caused expenses to increase.

Support Services
The Support Services segment reported sales of JPY15.8bn (-15.6% YoY) and a segment loss of JPY75mn (versus profit of
JPY416mn in FY02/20). Earnings of Aeon Compass (subsidiary engaged in travel-related businesses) deteriorated.
Q4 sales were JPY4.1bn (-11.1% YoY), and the segment profit was JPY96mn (versus a loss of JPY25mn in Q4 FY02/20). Weakperformance at Aeon Compass due to the cancellation of events and trips and the sale of the ID photo machine business were themain reasons for the decline in sales.

Overseas businesses
Overseas businesses reported sales of roughly JPY19.9bn (+1.0% YoY) and segment profit of about JPY1.6bn (-1.7% YoY). In
China, the Wuhan subsidiary was impacted by the city’s lockdown from the start of the year to early April, but accelerated
marketing activities to cultivate new customers once the lockdown was lifted, and has started providing services at several
facilities. The Jiangsu subsidiary won contracts for mid- to upscale shopping centers, hospitals, nursing homes, andredevelopment areas. In the ASEAN region, the company expanded contracts to work mainly on Aeon group stores in Indonesia.
Note that overseas subsidiaries’ earnings are for January–December 2020.

Q3 FY02/21 results (out January 13, 2021)
Summary▷

In cumulative Q3 FY02/21, Aeon Delight reported consolidated sales of JPY224.4bn (-3.5% YoY), operating profit of JPY11.2bn(-7.4% YoY), and net income of JPY6.3bn (-14.2% YoY). Sales and profit fell as some contracted facilities were partially closed
or temporarily shut down, events were canceled, and people refrained from going out due to the COVID-19 pandemic. The
company assumes that the pandemic will have a negative impact of about JPY1.5bn on FY02/21 operating profit. In cumulative
Q3, the drag was about JPY1.3bn (roughly JPY1.1bn in 1H).

▷

Non-cumulative Q3 sales were JPY74.7bn (-0.7% YoY), and operating profit was JPY3.7bn (+5.8% YoY). Q3 sales fell less thanQ1, when they were down by 7.0% YoY, and Q2, when they were down by 2.8%. Sales generated by facilities management,
security, and cleaning began to rise thanks in part to results associated with commercial facilities and new contracts involving
headquarter buildings held by automobile and drug manufacturers, head offices of local banks, hotels, distribution centers,
baseball fields, and other facilities. GPM improved to 12.5% (versus 12.3% in Q3 FY02/20). Gradually contributing to thisimprovement were price negotiations for low-fee deals, cost control achieved through personnel saving, supplierconsolidation, and purchase price optimization. The company reduced SG&A expenses to JPY5.6bn (-2.3% YoY). Travel andtransportation expenses fell thanks to the active application of teleworking and remote conferencing.

▷

FY02/21 company forecast remains unchanged at consolidated sales of JPY315.0bn (+2.1% YoY), operating profit of JPY16.5bn(+3.1% YoY), net income of JPY10.0bn (+7.0% YoY), and EPS of JPY200.13. The annual dividend forecast is also unchanged at
JPY70 per share. Versus full-year forecast, cumulative Q3 sales were 71.2% (75.4% in Q3 FY02/20), operating profit 68.0%(75.6%), and net income 63.3% (78.8%). Aeon Delight seeks to grow sales in part by expanding sales of cleaning for epidemic
prevention and related supplies, replacing security cameras, and stepping up proposals related to EV charger installation. At
the same time, it will aim to achieve the projections in its full-year forecast by minimizing costs through measures such as

40/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

supplier consolidation, purchase price optimization, and active implementation of teleworking remote conferencing. The
company will also bolster its efforts to achieve targets by raising capital efficiency through asset sales and other means.

Results by segment
Facilities Management
The Facilities Management segment reported cumulative Q3 sales of JPY43.8bn (-1.0% YoY) and segment profit of JPY3.9bn(-3.0% YoY). To increase sales, the company brought its integrated facility management service using an open network system
into Aeon Style Shin-Urayasu and worked to expand sales of environment-friendly, CFC-free refrigerated display cases, but these
efforts were not sufficient to turn sales around. With the aim of improving profitability, the company is concentrating on area
management and progressing cost reduction measures such as improving profitability of poorly performing properties,
centralizing purchasing, and optimizing purchase unit prices.
Q3 sales were JPY14.7bn (+0.8% YoY), and segment profit was JPY1.4bn (+9.4% YoY). Sales in Q1 and Q2 fell YoY due in part to
the COVID-19 pandemic. However, sales began to rise in Q3, benefitting from new contracts as negative impact from thepandemic abated. Earning power in the Facilities Management segment rose thanks in part to personnel saving achieved throughexpansion in the areas covered by facility management services (reducing personnel assigned to customer facilities andundertaking facility management by region instead of individual facility), cost reduction attained through standardization of
replacement equipment and devices, and internalization of repair work. Segment OPM was 9.3%, up from 8.5% in Q3 FY02/20.
Aeon Delight installed a variety of systems and sensors targeting automation of resident facility management at model stores in
Hokkaido. Later, the company field tested this equipment and verified its efficacy. Moving forward, the company plans topromote a horizontal rollout that will cut back on required personnel and expand the area covered by its facility management
services to include all of Hokkaido. At the same time, it is also planning a nationwide rollout that will focus on Aeon group stores.

Security Services
The Security Services segment reported cumulative Q3 sales of JPY33.0bn (-1.0% YoY) and segment profit of JPY2.4bn (+8.2%
YoY). Amid a worker shortage in recent years, the company continued to streamline its business by automating systems to handle
routine tasks such as facility entry/exit management and store closings. Profitability improved as a result of initiatives to optimize
unit prices through price negotiations.
Q3 sales were JPY11.3bn (+1.3% YoY), and segment profit was JPY793mn (-0.3% YoY). Sales in Japan fell slightly YoY, but sales
generated overseas (in China, Vietnam, etc.) rose on a rise in the number of contracts acquired. The company is conducting
negotiations aimed at achieving optimal pricing for nighttime security system installation proposals and other businesspropositions. However, segment profit fell slightly YoY due to a larger fixed cost burden associated with overseas subsidiaries.

Cleaning Services
The Cleaning Services segment reported cumulative Q3 sales of JPY46.1bn (-0.9% YoY) and segment profit of JPY5.3bn (+0.9%
YoY). The company stepped up proposals to expand the rollout of “new standard cleaning” (a new cleaning method that isbased on scientific evidence and produces hygienic environments using equipment that is different from that used in typicalcleaning), its cleaning standards in the with-COVID era, focusing on training specialists in cleaning for epidemic prevention.
Profitability improved as a result of efforts to improve profitability of poorly performing properties and share successful workplacecase studies.
Q3 sales were JPY15.7bn (+0.4% YoY), and segment profit was JPY1.9bn (+7.2% YoY). Sales began to rise in Q3 thanks in part toan increase in new contracts, contract acquisitions associated with solutions such as emergency disinfecting conducted in
response to the COVID-19 pandemic, and the launch of “new standard cleaning.” Sources of new added value such as
emergency disinfecting and “new standard cleaning” appear to be contributing to improvement in profitability.

41/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Construction Work
The Construction Work segment reported cumulative Q3 sales of JPY31.0bn (-3.1% YoY) and segment profit of JPY2.9bn (+1.3%
YoY). Cumulative results in Q3 were slightly below projections, apparently due to some construction work launch delays causedby the COVID-19 pandemic. However, the company secured higher profit YoY as earning power in the segment increased thanks
in part to a decrease in cost of sales. Aeon Delight is targeting recovery through acquisition of construction projects that have notyet been started and construction projects associated with environmental measures, including the installation of electric vehicle
charging stations.
Q3 sales were JPY8.9bn (-0.2% YoY), and segment profit was JPY798mn (+19.3% YoY). The company is steadily receiving orders
for services such as renovation work for the Aeon group, thereby securing relatively stable results. The company is endeavoring
to raise earning power in the segment in spite of its present tendency to fluctuate according to the quantity and nature ofacquired contracts. In support of this objective, the company is implementing a variety of measures, including efforts aimed atraising the accuracy of its work estimates and standardizing its procured materials. In December 2020, the company announced
its absorption of wholly owned subsidiary U-COM Co., Ltd. Through this merger, the company is seeking to improve efficiency.

Materials and Supplies Sourcing Services
The Materials and Supplies Sourcing Services segment reported cumulative Q3 sales of JPY39.6bn (+2.8% YoY) and segment
profit of JPY1.9bn (-4.9% YoY). Sales grew on orders for products to prevent the spread of COVID-19 (such as commercial-grademasks, gloves, alcohol, and acrylic screens to prevent droplet spread), as well as orders for Aeon’s TOPVALU private brandpackaging materials. Despite lower purchasing costs achieved through economies of scale and improved distribution efficiency,
profit declined, hurt by factors such as the new charge for checkout bags starting in July 2020. Q3 sales were JPY13.0bn (+3.1%
YoY), and segment profit was JPY567mn (-4.1% YoY).

Vending Machine Services
The Vending Machine Services segment reported cumulative Q3 sales of JPY19.1bn (-19.8% YoY) and segment profit of
JPY563mn (-40.6% YoY). Beverage sales fell sharply due to temporary closure of commercial facilities where vending machines
are installed. Although the company installed more of its own multibrand vending machines (which offer products from anumber of different brands), this was not sufficient to compensate for lower sales.
Q3 sales were JPY7.0bn (-8.9% YoY), and segment profit was JPY206mn (-15.2% YoY). Ostensibly, these results occurred because
the COVID-19 pandemic lowered the frequency of visits to commercial facilities and reduced the lengths of time that visitors
spent at these facilities.

Support Services
The Support Services segment reported cumulative Q3 sales of JPY11.8bn (-17.1% YoY) and a segment loss of JPY171mn (versus
profit of JPY441mn in cumulative Q3 FY02/20). Earnings of Aeon Compass (subsidiary engaged in travel-related businesses)
deteriorated. The Support Services segment excluding the former Kajitaku recorded sales of JPY9.3bn (-11.9% YoY) and segment
profit of JPY584mn (-57.7% YoY).
Q3 sales were JPY4.0bn (-11.4% YoY), and segment loss was JPY71mn (versus profit of JPY187mn in Q3 FY02/20). Excluding
impact from Actier, Inc. and Keiji Shinyoukumiai (formerly known as KAJITAKU), segment sales were JPY3.2bn (-11.7% YoY), andoperating profit was JPY268mn (-47.7% YoY). Curtailment of business trips from Aeon group companies continues to affect theresults generated by Aeon Compass. Aqutia Corporation, which operates the Housekeeping Support Business formerly handled
by KAJITAKU, reported a recovery in demand compared to Q1 and Q2, but future demand has once again become uncertain due
to a second state of emergency declared in January 2021. KJS Corporation, which operates a store support business formerly
handled by KAJITAKU, experienced a contraction in business scale due to the transfer of its ID photo machine business on June 30,
2020. It is also expected to withdraw from its smartphone printing business and picture palette business during FY02/21. Startingin FY02/22, it will comprise only the copier business, and the company projects a decline in operating loss along with thisdecrease in scale.

42/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Overseas
Overseas businesses reported sales of roughly JPY14.3bn (+2.6% YoY) and segment profit of about JPY1.1bn (-1.9% YoY). In
China, the Wuhan subsidiary was impacted by the city’s lockdown in early 2020, but accelerated marketing activities to cultivate
new customers once the lockdown was lifted, and has started providing services at several facilities. The Jiangsu subsidiary won
contracts for mid- to upscale shopping centers, hospitals, nursing homes, and redevelopment areas. In the ASEAN region, thecompany expanded contracts to work mainly on Aeon group stores in Indonesia. Note that overseas subsidiaries’ cumulative Q3
earnings are for January–September 2020.

1H FY02/21 results (out October 7, 2020)
Summary▷

In 1H FY02/21, Aeon Delight reported consolidated sales of JPY149.7bn (-4.9% YoY), operating profit of JPY7.5bn (-12.7% YoY),
and net income of JPY3.9bn (-23.9% YoY). Sales and profit fell YoY as some contracted facilities were partially closed or
temporarily shut down, some events were canceled, and people refrained from going out due to the COVID-19 pandemic.
The company assumes that the pandemic will have a negative impact of about JPY1.5bn on FY02/21 operating profit. In 1H,
the drag was about JPY1.1bn (roughly JPY1.0bn in Q1). Q2 standalone sales were JPY76.2bn (-2.8% YoY), and operating profit
was JPY4.0bn (-15.6% YoY). Q2 sales fell less than Q1, when they were down by 7.0% YoY.

▷

FY02/21 company forecast remains unchanged at consolidated sales of JPY315.0bn (+2.1% YoY), operating profit of JPY16.5bn(+3.1% YoY), net income of JPY10.0bn (+7.0% YoY), and EPS of JPY200.13. Versus full-year forecast, 1H sales were 47.5%(51.0% in 1H FY02/20), operating profit 45.5% (53.7%), and net income 39.4% (55.4%). The rate of progress in terms of net
income was particularly low due in part to the booking of JPY1.3bn in loss on sale of businesses associated with the transfer ofthe former Kajitaku’s certification photo machine business. The company is aiming to achieve its targets, including the target
for net income, by making up for delays to various measures caused by the COVID-19 pandemic; strengthening its proposal of
epidemic prevention-related services and capturing new demand; and selling assets. The annual dividend forecast is alsounchanged at JPY70 per share.

▷

Life with and after the COVID-19 pandemic: As well as adapting to life with the COVID-19 pandemic, the company has started
initiatives to create a new normal for its facilities management services after the pandemic. Initiatives include establishingscientific evidence-based cleaning methods to deliver a hygienic environment; providing efficient ventilation while
maintaining comfort levels; developing and implementing contact-less services; and educating store employees regarding
infection awareness and prevention. Aeon Delight is the company responsible for spearheading crisis management for the
Aeon group. As such, it plans to provide services to major customers and develop new standards for other customers as well.

Results by segment
Security Services
Sales in Security Services in 1H were JPY21.7bn (-2.2% YoY) and segment profit was JPY1.6bn (+12.9% YoY). Demand for facility
security, crowd control, and traffic security fell off due to partial and temporary closures of a portion of contracted facilities.
Meanwhile, profitability improved as the company cut costs by negotiating to optimize unit prices and systemizing store entry
and exit management and closing operations. In Q2, sales were JPY10.9bn (-1.7% YoY) and segment profit was JPY831mn(+21.8% YoY). In response to manpower shortages, the company systemized its security services and increased its level ofproductivity per individual member of security staff. At the same time, the company conducted negotiations aimed at priceoptimization (achieving an increase in sales per employee). Through these efforts, the company achieved higher segment profit
despite a decline in sales.

43/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Cleaning Services
In Cleaning Services, 1H sales were JPY30.4bn (-1.6% YoY) and segment profit was JPY3.4bn (-2.3% YoY). The company captured
demand for services associated with the spread of the COVID-19 pandemic, such as sterilization, disinfection, and cleaning, but
sales declined YoY due in part to both partial and temporary disclosures of some commercial facilities. It also strove to cut costs
by laterally applying successful examples of improvement measures on a wider scale while conducting price negotiations for
low-profit properties. Although these efforts did produce measurable results, the negative impacts from commercial facility
closures and other factors were significant. In Q2, sales came to JPY15.4bn (-0.7% YoY) and segment profit was JPY1.8bn (-0.1%
YoY). Sales fell for the second consecutive quarter due primarily to sluggish performance associated with department stores andother commercial facilities. However, performance is gradually recovering and at the end of Q2 (August), the company noted an
uptick in monthly sales. OPM in Q2 improved to 11.6% (versus 11.5% in Q2 FY02/20) thanks in part to the expanded lateralapplication of successful improvement measures and automation involving the installation of cleaning robots.

Construction WorkIn Construction Work, 1H sales were JPY22.1bn (-4.3% YoY) and segment profit was JPY2.1bn (-4.3% YoY). The company
expanded its volume of renovation contracts, adding among others an agreement regarding renewal construction work for an
entire live entertainment facility developed by a major publisher (a new market area for the company). Despite this expansion,
sales declined YoY as some construction work was delayed due to the COVID-19 pandemic. The company additionallyendeavored to reduce costs by optimizing the operating procedures and processes associated with all types of construction.
Consequently, Q2 sales were JPY10.6bn (-4.4% YoY) and segment profit was JPY942mn (-12.8% YoY). Q2 also saw someconstruction work pushed back until 2H due primarily to movement restrictions associated with the COVID-19 pandemic anddelayed procurement of parts. Also contributing to the YoY decline in performance was the comparative impact of a large project
for the Aeon group that generated sales bookings in 1H FY02/20, but not during 1H FY02/21. In 2H, the company will strive toexpand its volume of large-scale construction contracts through participation from the design stage, acquire small-scaleconstruction projects through collaboration with partner companies, and improve productivity while making up for the delayed
achievement of targets in its plan.

Materials and Supplies Sourcing Services
In Materials and Supplies Sourcing Services, 1H sales were JPY26.6bn (+2.7% YoY) and segment profit was JPY1.3bn (-5.2% YoY).
Sales rose YoY thanks to orders for products used to prevent the spread of the COVID-19 pandemic (protective masks for
professional use, gloves, alcohol, acrylic panels used to prevent droplet exposure, etc.) and for packaging materials associatedwith TOPVALU, a private brand from Aeon. Despite growth in sales, profit declined YoY due to deterioration in profitability. In Q2,
sales were JPY13.7bn (+5.6% YoY) and segment profit was JPY672mn (+4.5% YoY). Driving growth in sales were pandemic
prevention products for the Aeon group and packaging materials associated with TOPVALU. The company was able to achieve
this growth in sales, absorbing a decline in sales of disposable shopping bags (which account for about 4% of segment sales) that
occurred as stores began charging for these bags. During 2H, the company will strive to expand sales outside of the Aeon group,
expand installation of acrylic panels, reduce costs by leveraging its procurement scale, and improve logistical efficiency as it aims
to improve profitability.

Vending Machine Services
In Vending Machine Services, sales in 1H were JPY12.1bn (-25.0% YoY) and segment profit was JPY357mn (-49.4% YoY).
Beverage sales fell off significantly due primarily to the temporary closure of commercial facilities where vending machines are
installed. The company expanded installation of its own multibrand vending machines, which feature a mix of brands fromseveral beverage companies, but was unable to compensate for the decline in sales. In Q2, sales were JPY7.3bn (-12.5% YoY) andsegment profit was JPY367mn (-18.3% YoY). Performance has been gradually recovering but sales continued to decline because
customers of shopping malls and other facilities have not returned in sufficient numbers. During 2H, the company will aim tostrengthen its business foundations primarily by engaging in collaborative campaigns with manufacturers as it continues toexpand installation of its own multibrand vending machines.

44/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Support Services
In Support Services, sales in 1H were JPY7.7bn (-19.8% YoY) and segment loss was JPY100mn (versus operating profit of
JPY254mn in 1H FY02/20). Excluding impact from the former Kajitaku, sales were JPY6.1bn (-12.1% YoY) and segment profit was
JPY316mn (-63.6% YoY). This decline in performance was largely due to deteriorating business performance at Aeon Compass, a
subsidiary that is developing a travel-related business. Although losses at the former Kajitaku narrowed, its surviving householdsupport services business did not perform well due to impact from the COVID-19 pandemic (demand for services such as air
conditioner cleaning was sluggish). In Q2, sales were JPY3.8bn (-20.9% YoY) and segment loss was JPY108mn (versus segment
profit of JPY378mn in Q2 FY02/20). Excluding impact from the former Kajitaku, sales were JPY3.0bn (-13.3% YoY) and operating
profit was JPY163mn (-66.3% YoY).

Overseas businessIn the Overseas business, sales in 1H were about JPY9.4bn (+2.9% YoY) and operating profit was approximately JPY710mn (-1.3%
YoY). The company’s subsidiary in Wuhan, China was impacted by the city lockdown associated with the COVID-19 pandemic
but swiftly transitioned back to normal business conditions after the lockdown was lifted. At present, the company is pushing
forward with activities aimed at returning to the trajectory of growth it was following prior to the COVID-19 pandemic and has
begun new customer development. The impact of the pandemic on the company’s subsidiary in Jiangsu, China was small as thecompany successfully expanded orders associated with middle- and high-end shopping centers, hospitals and nursing homes,
infrastructure, and redevelopment areas, and it began providing services for several facilities. In ASEAN regions, performance also
received a boost from the conclusion of a contract associated with the fifth Aeon Mall in Vietnam and expansion in the volume ofcontracts regarding complex management services for the first and second Aeon Malls in Indonesia. It is important to note that
1H performance from overseas subsidiaries reflects results booked from January through June.

Q1 FY02/21 results (out July 8, 2020)
Summary▷

In Q1 FY02/21, Aeon Delight reported consolidated sales of JPY73.5bn (-7.0% YoY), operating profit of JPY3.5bn (-9.1% YoY),
and net income of JPY3.0bn (+44.5% YoY). Sales from commercial facilities management services (Facilities Management,
Cleaning Services, Security Services, Materials and Supplies Sourcing Services, and Vending Machine Services businesses)
declined YoY as some facilities were partially closed and others temporarily shut down due to the COVID-19 pandemic. In theConstruction Work business, the number of contracts declined and some projects were postponed mainly as a result of delays
in sourcing parts from overseas. Sales of security and travel-related services also fell because fewer events were held. According
to the company, the COVID-19 pandemic had a roughly JPY1.0bn negative impact on operating profit. The company initiallyanticipated an annual negative impact of roughly JPY1.5bn on operating profit from the COVID-19 pandemic, and Q1 resultsoverall (including the impact of the pandemic) were largely in line with the company’s initial forecast.

▷

FY02/21 company forecast remains unchanged at consolidated sales of JPY315.0bn (+2.1% YoY), operating profit of JPY16.5bn(+3.1% YoY), net income of JPY10.0bn (+7.0% YoY), and EPS of JPY200.13. Versus full-year forecast, Q1 sales were 23.3%(25.6% in Q1 FY02/20), operating profit 20.9% (23.7%), and net income 29.9% (22.1%). The fast progress rate of net income
is attributed to tax obligations in Q1 being smaller than usual. The annual dividend forecast is also unchanged at JPY70 per
share.

Results by segment
Facilities Management
The Facilities Management segment posted Q1 sales of JPY14.5bn (-2.8% YoY) and segment profit of JPY1.3bn (-12.4% YoY). The
drop in sales was attributable to closures of some commercial facilities and a temporary suspension of operations at othercommercial facilities operated by the company’s customers. However, the decline was modest as many facilities still require
facilities management services (such as disaster prevention and periodic repair services) even when they are not operating.
Although the company worked to improve operations at low-margin facilities and enhance business processes to achieve greater
45/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

work efficiency and a reduction in manpower, OPM in the segment fell to 8.7% (from 9.6% in Q1 FY02/20) due to considerable
impact from higher outsourcing costs in the existing businesses.
In terms of enhancing business processes to achieve greater work efficiency and a reduction in manpower, new initiatives in
Hokkaido yielded results. The company reduced on-site staff at customer facilities by scaling back operations that do notcontribute value to customers, and by introducing remote monitoring and patrol-type facility management. It is working towarda system with which it can provide the same level of facility management services as before but with smaller teams. According to
the company, GPM for related facilities rose 4pp in Q1 FY02/21 thanks to these efforts. The company aims to test these initiatives
in Hokkaido through the summer of 2020, and subsequently roll them out across the rest of Japan.

Security Services
The Security Services segment posted Q1 sales of JPY10.8bn (-2.7% YoY) and segment profit of JPY763mn (+4.5% YoY). The
decline in sales reflected lower demand for security for facilities and security to handle crowds and traffic as some contracted
facilities closed or temporarily suspended operations. Disappearance of demand for event-related security was another factor
weighing on sales. At the same time, the company has continued pricing negotiations against the backdrop of a tight labormarket. While working toward optimization of prices, the company introduced equipment to support store entry/exit
management and operations at store closing. The company also aimed to reduce costs by introducing systems, and OPM
improved to 7.0% (from 6.6% in Q1 FY02/20) as a result.
According to the company, the number of stores that have adopted its systems for store entry/exit management and operations
at store closing has steadily increased. In Q1 FY02/21 alone, 26 stores adopted such system, and it plans to roll this out to over
100 stores within FY02/21.

Cleaning Services
The Cleaning Services segment posted Q1 sales of JPY15.0bn (-2.6% YoY) and segment profit of JPY1.6bn (-4.5% YoY). Sales fell
YoY due to a suspension of operations at commercial facilities. The company pushed ahead with measures to reduce costs in aneffort to improve profitability at low-margin facilities. It expanded successful improvement initiatives horizontally across thecompany, and proceeded with introducing autonomous cleaning robots. However, store closures at some contracted facilities
had a major impact on results, and OPM in the segment declined to 11.0% (from 11.2% in Q1 FY02/20) as a result.

Construction Work
The Construction Work segment posted Q1 sales of JPY11.5bn (-4.1% YoY) and segment profit of JPY1.1bn (+4.1% YoY). Orders
for various types of renovation work increased, but some construction work lagged due to delays in the sourcing of parts fromoverseas amid the COVID-19 pandemic, resulting in a decline in sales. However, segment profit increased YoY on cost
reductions.
From FY02/21, the segment moved to a structure under which orders over a certain amount are carefully examined by thecompany’s construction work division. Following this change, the company made progress in optimizing specifications forvarious types of work and streamlining processes, contributing to a reduction in costs. In addition, the company considers the
Kanto and Kansai regions—both large markets—as strategic areas, and aims to increase projects in which it can participate fromupstream stages (design, etc.). The company looks to expand orders for large construction projects and continues to strengthengroup-wide collaboration. In Q1, it turned subsidiary A to Z Service Co., Ltd. (55.9% ownership held to date), which provides
small-scale store design, construction management, facility maintenance, and general maintenance services to major chains,
including leading coffee shop chains) into a wholly owned subsidiary.

Materials and Supplies Sourcing Services
The Materials and Supplies Sourcing Services segment posted Q1 sales of JPY13.0bn (-0.2% YoY) and segment profit of JPY612mn(-14.0% YoY). The decline in sales was modest thanks to orders from Aeon group companies and other customers for products toprevent the spread of COVID-19 infections (such as masks, gloves, alcohol, and plastic sheets to prevent droplet infection to be
used in business settings).
46/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Vending Machine Services
The Vending Machine Services segment posted Q1 sales of JPY4.7bn (-38.6% YoY) and a segment loss of JPY10mn (versus profitof JPY256mn in Q1 FY02/20). The weak outcome was driven by a sharp decline in sales of beverages due to the suspension ofoperations at commercial facilities where the company’s vending machines are located. Meanwhile, as an initiative to improveearnings over the medium term, the company continued to expand installation of its own multibrand vending machines thatfeature a mix of brands from several beverage companies (these vending machines accounted for just over 30% of the 43,000
vending machines installed as of Q1). However, the company says sales of beverages are recovering now that temporary
suspensions of operations at commercial facilities have been lifted.

Support Services
The Support Services segment posted sales of JPY4.0bn (-18.7% YoY) and segment profit of JPY8mn (versus loss of JPY124mn in
Q1 FY02/20). Excluding the former Kajitaku, sales came to JPY3.1bn (-10.8% YoY) and segment profit to JPY153mn (-60.4% YoY).
At subsidiary Aeon Compass, which arranges business trips for companies, earnings worsened as people refrained from traveling,
and this had a negative impact on segment results. The company says the rental meeting room business performed surprisingly
well as a greater number of customers booked large meeting rooms to ensure sufficient distance between meeting participants.
Aeon Delight sold the ID photo machine business of consolidated subsidiary KJS (former Kajitaku) on June 30, 2020, and weunderstand it is making progress with business reforms.

Earnings trend in overseas businessIn Q1, which reflects results in January–March, overseas sales were about JPY4.8bn (+8.9% YoY) and operating profit was about
JPY360mn (+11.9% YoY). In Chinese city of Wuhan, many commercial facilities suspended operations as the city was closed off,
and the company’s Wuhan subsidiary saw sales decline even though it continued to provide services to local Aeon group andother stores. However, the same subsidiary won contracts for construction preparation work ahead of the construction of
temporary medical facilities, as well as for preliminary cleaning of hotels and room setting/arrangement for medical teams
dispatched to deal with the COVID-19 crisis. In other words, it actively provided services that were outside the scope of its
ordinary functions. Its efforts in this respect were recognized, and it was awarded the title of “Infection Prevention Advanced
Property Management Service Company” by the Jiangxia District in Wuhan City, which led to enhancing its name recognition.
The company’s subsidiary in Jiangsu Province, China expanded sales YoY on growth in orders from facilities related to medium- tohigh-end shopping centers, hospitals and nursing homes, infrastructure, and redevelopment areas. The company says many ofthese new projects came from outside the Aeon group. China-wide sales remained flat YoY in part thanks to contributions fromthe sales growth at the Jiangsu subsidiary, and sales in China accounted for roughly 60% of total overseas sales. In Q2 (April–June), sales at the Wuhan subsidiary recovered as the city was reopened.
In the ASEAN region, earnings expanded as the company’s Indonesian subsidiary PT Sinar Jernih Sarana (SJS) started providing
comprehensive facility management services to Indonesia’s first and second Aeon Malls. In Vietnam, the company achieved sales
growth by cultivating new customers. The negative impact of partial facility closures and restrictions on going out on earnings in
the ASEAN region was more significant in Q2 than in Q1. (However, sales from the ASEAN region only account for roughly 40%
of total overseas sales, so the impact of the earnings deterioration on consolidated earnings is small.)

Post-COVID-19 world
Aeon Delight realizes that the COVID-19 pandemic will make infection-prevention measures standard practice at public facilities,
and drive changes in the functions expected for office and education buildings as telework and online learning gain traction. The
company has established a project team tasked with undertaking initiatives in preparation for the “new normal” in facility
management. Specifically, the project team will 1) establish epidemic prevention and disinfection methods based on hygienic
cleaning, 2) develop a no-contact store environment, and 3) improve energy efficiency, ventilation, and air conditioning through
HVAC management that leverages open network systems. The company’s new approach toward facility management was also
reflected in the COVID-19 Pandemic Prevention Protocol released by the Aeon group on June 30.

47/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Electric power-related initiatives
The company aims to establish energy management services—covering all aspects from supplying necessary energy to local
communities to energy-efficient facility management and operation—as a new core business. In FY02/20, it participated in a trial
related to the construction of an electricity interchange settlement system based on blockchain technology in the Urawa-misono
district in Saitama Prefecture. In FY02/21, the company will participate in a Virtual Power Plant (VPP) Construction Demonstration
Project promoted by the Ministry of Economy, Trade and Industry (METI). Led by a consortium headed by Kansai Electric Power(TSE1: 9503), the project will test power adjustment capacity control methods for water pumps and air conditioning equipment
at Aeon Mall Kobe Kita by leveraging energy management systems provided by Aeon Delight. Through its participation in the
project, the company aims to accelerate the construction of VPPs, and develop power supply and demand adjusting capabilities
for the Aeon group based on the concept of a supply/demand adjustment market, starting from FY2021.

Virtual Power Plant (VPP): Technology that aggregates power from a range of energy resources dispersed in various regions (including energy storage
solutions) spanning solar and wind power generation facilities, storage batteries, and electric vehicles, controls them through IoT, and makes them
function as a single power station. VPPs are being built as a technology to stabilize the supply/demand balance for electric power supplied byrenewable energy sources, which are heavily influenced by weather conditions.

Supply/demand adjustment market: Refers to the capability of adjusting supply when a general electricity transmission and distribution utility company(electric power utility company) ultimately matches electric power demand to supply. A supply/demand adjustment market, where adjustment
capacity can be traded, is slated to be established in FY2021. The establishment of this market is expected to prompt further technologicaldevelopment and advance the development of new markets.

48/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

News & topics
December 2020
On December 22, 2020, the company announced an absorption-type merger with wholly owned subsidiary KJS.

Aeon Delight has been promoting structural reforms at KJS (formerly Kajitaku) since revelations of accounting irregularities at thelatter emerged. With the market for household support services expected to expand, Aeon Delight believed it vital to maintain
operations in the domain, and in November 2019 announced a spin-off of the household support services business from Kajitaku
through an incorporation-type company split, with the new company to be operated under the name Actia. Aeon Delightchanged the Kajitaku name to KJS and advanced structural reforms in the company, including the transfer of the certification
photo machine business. The company has also decided to withdraw from the smartphone printing and picture palette business
in FY02/21, leaving KJS with just the copy machine business. The company has copy machine installation contracts extending as
far as 2023, and intends to fulfill its responsibilities to its customers and end-users by honoring those existing contracts. Given the
difficulties KJS is having in maintaining its business, including in securing a sufficient number of employees, Aeon Delight decided
to conduct an absorption-type merger. Since KJS is a wholly owned subsidiary, Aeon delight does not expect the merger to havean impact on consolidated earnings. The company expects a decline in corporate taxes on the succession of KJS losses carriedforward and intends to announce related data whenever the need for disclosure arises. Shared Research thinks that the merger
announcement signals that the reforms triggered by the accounting irregularities at Kajitaku have generally run their course.

On the same day, the company announced an absorption-type merger with wholly owned subsidiary U-COM.
The company made U-COM, which operates a commercial facility design and interior decoration business, a wholly owned
subsidiary in May 2018. Aeon delight intended to increase store design and interior decoration work orders in its construction
business through the acquisition. However, the company also created a design division in its interior design department that
handles commercial facility design and interior decoration operations. Though the absorption-type merger announced on
December 22, 2020, the company hopes to consolidate its creative human resources to expand refurbishing operations forcommercial facilities and specialty stores, while also eliminating redundant work, consolidating management resources, andimproving capital efficiency. Since U-COM is a wholly owned subsidiary, the company does not expect the merger to have an
impact on consolidated earnings.

On the same day, the company announced the dissolution and liquidation of wholly owned subsidiary General Services.
With the goal of fully developing the business process outsourcing (BPO) business, the company acquired General Services Inc.
(GSI) in October 2012, and made it a wholly owned subsidiary in December 2018. This allowed the company to acquire sales
expertise for large clients and serve as a consulting firm to a certain extent. Factoring in the potential for growth at GSI as well as
the possibility for synergies with Aeon Delight, management decided to dissolve and liquidate the former. The company believes
the action will have only a marginal impact on consolidated earnings.

On the same day, the company made an announcement regarding the recommendation of a surcharge payment order by the
Securities and Exchange Surveillance Committee.
The Securities and Exchange Surveillance Committee recommended that the company be ordered to pay a surcharge of
JPY35.7mn in line with the latter’s June 28, 2020 filing of an amended securities report. The company will consider taking action
after receiving a formal notice from the Financial Services Agency, though the general policy is that as long as there are no special
circumstances, the violations are to be admitted and the surcharges paid. Since the revelation of suspected accounting
irregularities at Kajitaku, the company has been working to prevent any similar recurrence and to restore its corporate value overthe longer term.

49/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

On the same day, the company announced a strengthening in New Standard Cleaning offerings for offices.
New Standard Cleaning is a cleaning method provided by sanitation specialists and includes epidemic prevention measures.
Aeon Delight started offering the service mainly to commercial facilities in September 2020, and has now decided to strengthen
its service offerings to offices. It aims to increase office service sales in FY02/24 to a level 1.5 times that seen in FY02/20. Following
the COVID-19 Pandemic Prevention Protocol released by Aeon (TSE1: 8267) in June 2020, the company developed the New
Standard Cleaning method based on the expertise gained through its service offerings to medical institutions. As of December
2020, the company employs more than 1,100 experts in epidemic prevention measures. The company is expanding the New
Standard Cleaning offerings for offices, objectively assessing the risk of infection in each office space and providing the most
optimal and efficient science-based plan in terms of cleaning procedures, frequency, and materials needed.

50/52

R
Coverage

Aeon Delight / 9787
LAST UPDATE: 2021.07.07

Research Coverage Report by Shared Research Inc. | https:.//sharedresearch.jp

Company profile
Company Name

Head Office
Minamisemba Heart Bldg.

AEON DELIGHT CO., LTD.

2-3-2 Minamisemba Chuo-ku, Osaka City
Osaka, Japan 542-0081

Phone

Exchange Listing+81-6-6260-5621

Tokyo Stock Exchange 1st Section

Established

Listed On

November 16, 1972

September 29, 1995

WebsiteFiscal Year-End

https://www.aeondelight.co.jp/english/

February

IR Contact

IR Web-https://www.aeondelight.co.jp/english/ir/

51/52

R

About Shared Research Inc.

Coverage

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously
updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on the web at https://sharedresearch.jp.
Current Client Coverage of Shared Research Inc.
Advance Create Co., Ltd.

Doshisha Corporation

KFC Holdings Japan, Ltd.

ADJUVANT COSME JAPAN CO., LTD.

Dream Incubator Inc.

KI-Star Real Estate Co., Ltd.

Raysum Co., Ltd.
RESORTTRUST, INC.

Aeon Delight Co., Ltd.

Earth Corporation

KLab Inc.

ROUND ONE Corporation

Aeon Fantasy Co., Ltd.

Edion Corporation

Kondotec Inc.

RYOHIN KEIKAKU CO., LTD.

Ai Holdings Corporation

Elecom Co., Ltd.

Kumiai Chemical Industry Co., Ltd.

SanBio Company Limited

AI inside Inc.

en Japan Inc.

Lasertec Corporation

SANIX INCORPORATED

AirTrip Corp.

Estore Corporation.

Locondo, Inc.

Sanrio Company, Ltd.

ALINCO INCORPORATED

euglena Co., Ltd.

LUCKLAND CO., LTD.

SATO HOLDINGS CORPORATION

and factory, inc.

FaithNetwork Co., Ltd.

Marumae Co., Ltd.

SBS Holdings, Inc.
Seikagaku Corporation

ANEST IWATA Corporation

Ferrotec Holdings Corporation

MATSUI SECURITIES CO., LTD.

AnGes Inc.

FIELDS CORPORATIONMedia Do Co., Ltd.

Seria Co.,Ltd.

Anicom Holdings, Inc.

Financial Products Group Co., Ltd.

Medical System Network Co., Ltd.

Serverworks Co.,Ltd.

Anritsu Corporation

First Brothers Col, Ltd.

MEDINET Co., Ltd.

SHIFT Inc.

Apaman Co., Ltd.

FreeBit Co., Ltd.

MedPeer,Inc.

Shikigaku Co., Ltd

ARATA CORPORATION

Gamecard-Joyco Holdings, Inc.

Mercuria Holdings Co., Ltd.

SHIP HEALTHCARE HOLDINGS, INC.

Artspark Holdings Inc.

GameWith, Inc.

Metaps Inc.

SIGMAXYZ Inc.

AS ONE CORPORATIONGCA Corporation

Micronics Japan Co., Ltd.

SMS Co., Ltd.

Ateam Inc.

Good Com Asset Co., Ltd.

MIRAIT Holdings Corporation

Snow Peak, Inc.

Aucfan Co., Ltd.

Grandy House Corporation

Monex Goup Inc.

Solasia Pharma K.K.

AVANT CORPORATIONGiG Works Inc.

MORINAGA MILK INDUSTRY CO., LTD.

SOURCENEXT Corporation

Axell Corporation

Hakuto Co., Ltd.

Mortgage Service Japan Limited.

Space Value Holdings CO., LTD

Azbil Corporation

Hamee Corp.

MRT Inc.

Star Mica Holdings Co., Ltd.

AZoom, Co., Ltd.

Happinet Corporation

NAGASE & CO., LTD

Strike Co., Ltd.

Base Co., Ltd

Harmonic Drive Systems Inc.

NAIGAI TRANS LINE LTD.

Sunnexta Group Inc.

BEENOS Inc.

HENNGE K.K.

NanoCarrier Co., Ltd.

SymBio Pharmaceuticals Limited

Bell-Park Co., Ltd.

Hosokawa Micron Corporation

NEC Networks & System Integration Corporation

Synchro Food Co., Ltd.

Benefit One Inc.

Hope, Inc.

Net Marketing Co., Ltd.

TAIYO HOLDINGS CO., LTD.

B-lot Co.,Ltd.

HOUSEDO Co., Ltd.

Net One Systems Co.,Ltd.

Takashimaya Company, Limited

Broadleaf Co., Ltd.

H2O Retailing Corporation

Nichi-Iko Pharmaceutical Co., Ltd.

Take and Give Needs Co., Ltd.

CanBas Co., Ltd.

IDOM Inc.

NIHON CHOUZAI Co.,Ltd.

TEAR Corporation

Canon Marketing Japan Inc.

IGNIS LTD.

Nihon Denkei Co., Ltd.

Tenpo Innovation Inc.

Career Design Center Co., Ltd.

i-mobile Co.,Ltd.

Nippon Commercial Development Co., Ltd.

3-D Matrix, Ltd.

Carna Biosciences, Inc.

Inabata & Co., Ltd.

Nippon Koei Co., Ltd.

The Hokkoku Bank,Ltd.
TKC Corporation

CARTA HOLDINGS, INC

Infocom Corporation

NIPPON PARKING DEVELOPMENT Co., Ltd.

CERES INC.

Infomart Corporation

NIPRO CORPORATIONTKP Corporation

Chiyoda Co., Ltd.

Intelligent Wave, Inc.

Nisshinbo Holdings Inc.

Tsuzuki Denki Co., Ltd.

Chori Co., Ltd.

ipet Holdings CO., Ltd.

Nisso Corporation

TOCALO Co., Ltd.

Chugoku Marine Paints, Ltd.

Itochu Enex Co., Ltd.

NS TOOL CO., LTD.

TOKAI Holdings Corporation

cocokara fine Inc.

ItoKuro Inc.

OLBA HEALTHCARE HOLDINGS,Inc.

Tokyu Construction Co., Ltd.

COMSYS Holdings Corporation

JAFCO Co.,Ltd.

OHIZUMI MFG. CO., LTD.

TOYOBO CO., LTD.

COTA CO.,LTD.

JMDC Inc.

Oisix ra daichi Inc.

Toyo Ink SC Holdings Co., Ltd

CRE, Inc.

JSB Co., Ltd.

Oki Electric Industry Co., Ltd

Toyo Tanso Co., Ltd.

CREEK & RIVER Co., Ltd.

JTEC Corporation

ONO SOKKI Co., Ltd.

Tri-Stage Inc.

Daiichi Kigenso Kagaku Kogyo Co., Ltd.

J Trust Co., Ltd

ONWARD HOLDINGS CO.,LTD.

TSURUHA Holdings

Daiki Axis Co.,Ltd.

Japan Best Rescue System Co., Ltd.

Pan Pacific International Holdings Corporation

VISION INC.

Daiseki Co., Ltd.

JINS HOLDINGS Inc.

PARIS MIKI HOLDINGS Inc.

VISIONARY HOLDINGS CO., LTD.

Daiwabo Holdings Co.,Ltd.

JP-HOLDINGS, INC.

PCA CORPORATION

V-cube,Inc.

Demae-Can CO., LTD

KAMEDA SEIKA CO., LTD.

PIGEON CORPORATIONWorld Holdings Co., Ltd.

DIC Corporation

Kanamic Network Co.,LTDP3, inc.

WOW WORLD Inc.

Digital Arts Inc.

KANEMATSU CORPORATIONQB Net Holdings Co., Ltd.

YELLOW HAT LTD.

Digital Garage Inc.

kaonavi, inc.

RACCOON HOLDINGS, Inc.

YOSHINOYA HOLDINGS CO., LTD.
ZAPPALLAS, INC.

Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.
Disclaimer: This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared Research Inc. offers
no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. We shall not be held responsible for any damage
caused by the use of this report. The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared
Research Reports belong to Shared Research. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are strictly
prohibited and a violation of the copyright of this report. Our officers and employees may currently, or in the future, have a position in securities of the companies
mentioned in this report, which may affect this report’s objectivity.
Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer: The report has been prepared by Shared Research under a contract with the company
described in this report (“the company”). Opinions and views presented are ours where so stated. Such opinions and views attributed to the company areinterpretations made by Shared Research. We represent that if this report is deemed to include an opinion from us that could influence investment decisions in thecompany, such an opinion may be in exchange for consideration or promise of consideration from the company to Shared Research.
Contact Details
Shared Research Inc.
3-31-12 Sendagi Bunkyo-ku Tokyo, Japan
https://sharedresearch.jp
Phone: +81 (0)3 5834-8787
Email: info@sharedresearch.jp

52/52