COMPANY RESEARCH AND ANALYSIS REPORTTOKAI Holdings Corporation
3167
Tokyo Stock Exchange First Section

28-Mar.-2019
FISCO Ltd. Analyst

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

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY3/19 3Q cumulative results................ ......................................................................................................

01

2. FY3/19 earnings outlook........................ ......................................................................................................

01

3. Medium-term management plan (IP20).. ......................................................................................................

02

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

02■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Gas and petroleum business.......................................................................................................................

04

2. Information and communications services business. ...................................................................................

04

3. CATV business....................................... ......................................................................................................

05

4. Building and real estate business.. ...............................................................................................................

05

5. Aqua business....................................... ......................................................................................................

05

6. Other businesses................................... ......................................................................................................

05■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. Overview of the FY3/19 3Q cumulative results.............................................................................................

06

2. Trends by business segment. . ......................................................................................................................

08

3. Financial position.........................................................................................................................................

11■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. Outlook for FY3/19.. .....................................................................................................................................

11

2. Medium-term management plan............ ......................................................................................................

14■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 16■ESG------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 17■Information security measures--------------------------------------------------------------------------------------------------------------------- 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/██SummaryThe decline in profits in the LP gas business will be covered by
the strong performances of the CATV, Aqua, and other businesses
toward record high profits for the first time in two fiscal periods
Based in Shizuoka Prefecture, TOKAI Holdings <3167> (hereafter, also “the Company”) is a comprehensive lifestyle-infrastructure company that is developing “energy and lifestyle-related services,” primarily the provision ofliquefied petroleum gas (LP gas), and “information and communications services.” In addition to realizing the Total
Life Concierge (comprehensive services for living) concept* 1, from FY3/19 it has started measures for a second
theme, of ABCIR+S,*2 which utilizes new service technologies that will lead to the next generation of businesses,
and it is aiming to take a further leap forward while advancing an M&A strategy.
*1	Total Life Concierge concept: a vision that aims to improve customer satisfaction by providing comprehensive and detailed
support for customers’ comfortable lifestyles through the various services provided by the TOKAI Group.
*2	ABCIR+S: the TOKAI Group’s strategy for technological innovation. It is the acronym of AI (A), Big Data (B), Cloud (C),IoT (I), Robotics (R), and Smart Phone (S).

1. FY3/19 3Q cumulative results
In the FY3/19 3Q cumulative period (April to December 2018) consolidated results, net sales increased 3.5% yearon-year (YoY) to ¥137,943mn and operating profit rose 7.0% to ¥7,038mn. So sales and profits both increased,
while net sales were a new record high for a 3Q cumulative period. This was mainly because, as a result of the active
investment in upfront costs in FY3/18, at the end of FY3/19 3Q the number of Group customers had increasedby 59,000 on the end of the previous fiscal year to 2,898,000, mainly in the CATV, LP gas, and Aqua businesses.
Looking at the factors causing operating profit to change, the decrease factors were the decline in the LP gas sales
volume to households due to the warm weather (¥400mn) and the rise in LP gas purchase costs (¥1.6bn), while
the increase factors were the effects of the higher sales from the rise in the number of customers (¥1.6bn), lower
costs to acquire customers and to prevent contract cancellations (¥700mn), and the improvement in earnings of
LIBMO (¥200mn), which was launched in the same period in the previous fiscal year. Compared to the Company
forecasts, it seems that overall, the result was about 10% lower than forecast because of the LP gas businessperforming below forecast.
2. FY3/19 earnings outlook
For the FY3/19 consolidated results, the initial forecasts have been left unchanged, of net sales to increase 5.1%
YoY to ¥195,600mn and operating profit to rise 27.2% to ¥13,960mn. In the LP gas business, it is expected thatthe impact of factors such as the rise in purchase costs due to the price increase implemented in January 2019 will
be minimized, and that this will be covered by the increases in earnings in the CATV and Aqua businesses, which
are making progress above forecast, and in the corporate information and communications services business. As
a result, the outlook is for record high profits for the first time in two fiscal periods. Alongside the implementation of
M&A, at the end of FY3/19 the number of Group customers is expected to have increased by 65,000 on the end of
the previous fiscal year to 2,941,000 customers. The rate or progress for this up to 3Q was slightly behind scheduledue to LIBMO performing below forecast.

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01 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Summary

3. Medium-term management plan (IP20)
In the medium-term management plan (IP20), the Company is targeting net sales of 339.3bn and operating profitof ¥22.5bn in FY3/21. Its strategy to achieve this will be to increase the number of Group customers to more than
4,320,000 (1.5 times the number at the end of March 2018) by utilizing M&As and also to maximize sales and profits
per customer by raising the current customer contract rate for multiple services* from about 14% to 20%. M&As
will target not only CATV businesses, but also gas, information and communication services, and new businesses.
The Company has set about ¥100bn for investment and is examining target companies.
*	Contract rate for multiple services = (total number of service contracts ÷ number of customers) -1

4. Shareholder return policy
There has been no change to the policy of continuously and stably returning profits to shareholders. The forecast
dividend per share for FY3/19 is ¥28.0 (dividend payout ratio, 46.3%), which is unchanged from the previous fiscal
year. Going forward, the Company intends to pay dividends while observing profit trends and financing needs,
with a benchmark dividend payout ratio of 40% to 50%. Also, at the end of March and the end of September, it
presents one gift to shareholders from among several possible choices, such as an Aqua product, a QUO card,and points for a TLC member service worth ¥1,000. When including the gifts to shareholders in an estimate of thetotal investment yield per share unit from the current share price level (closing price of ¥937 on February 27, 2019),
it is in the range of 4% to 7%*.
*	In the case of selecting either a QUO card or an Aqua product as the shareholder gift

Key Points
Achieved sales and profit growth as the decrease in profits in the LP gas business was outweighed by increases
in profits in other business segments• In FY3/19, the active investment to increase customer numbers is proving successful and the outlook is forrecord high profits for the first time in two fiscal periods• Aim for more than 4,320,000 Group customers and consolidated operating profit of ¥22.5bn for FY3/21 byadvancing the M&A strategy•㻾 㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕(¥bn)

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(¥bn)
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Source: Prepared by FISCO from the Company’s financial results

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02 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/██Business overview
Embraced “Total Life Concierge” as a management vision forproviding various lifestyle infrastructure services such as LP gas,Internet and CATV services
Based in Shizuoka Prefecture, Japan, the Company is expanding its two main businesses, “energy and lifestyle-related services,” primarily the provision of liquefied petroleum (LP) gas, and “information and communications
services,” and it is aiming to achieve its management vision of being a “Total Life Concierge” (TLC). It provides acomplete range of services for everyday life under a one contract, one stop, and one call-center model and while
deepening its connections with its customers, their local communities, society, and the global environment, it isstriving to enrich people’s lives and to contribute to the development of local communities and to the conservationof the global environment, and also to a grow as a comprehensive provider of life services that represents Japan.
The Company currently discloses information on six business segments; the gas and petroleum business, theinformation and communications services business, the CATV business, the building and real estate business, theAqua business, and other businesses. Looking at the sales structure by segment for FY3/19 3Q cumulative results,
the Company’s original business, the gas and petroleum business accounted for 39.6% of sales, the information andcommunications services business for 27.5%, and the CATV business for 16.5%. These three mainstay businesses
accounted for over 80% of sales. The details by business segment are as follows.



Sales structure by segment （ FY3/1㻥㻌㻟㻽）
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Source: Prepared by FISCO from the Company’s financial results

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

03 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Business overview

1. Gas and petroleum businessIn this business, approximately 85% of net sales are provided by the LP gas business and around 15% by thecity gas business. The mainstay LP gas business is developed by TOKAI Corporation, primarily for homes andbusinesses. The service areas are mainly in the Shizuoka and Kanto regions, but since 2015 it has also gradually
expanded into other areas including the south Tohoku, Chubu/Tokai, Chugoku, and Kyushu areas. As of the endof December 2018, it had 620,000 contracts, and in direct sales, it ranked third after Iwatani Corporation <8088>
and Nippon Gas <8174>. In terms of market share, it is the leader in Shizuoka, its home territory, with around20%, while it has a share of just under 10% in the highly competitive Kanto region, putting it in second place. As
there are approximately 20 million households nationwide that use LP gas, its nationwide market share is still at
the level of 3%, and going forward there remains room for it to grow its share, including by expanding sales areasand conducting M&A.
In the city gas business, TOKAI GAS CORPORATION supplies city gas in Yaizu City, Fujieda City, and Shimada Cityin Shizuoka Prefecture. As the service area is limited, the number of contracts, which was 55,000 at the end of
December 2018, has remained basically steady for the past several years. Currently, there are 200 city gas business
operators nationwide, but with the exception of the four largest companies, most are small- to medium-sized
operators with limited service areas. Following the liberalization of the retail city gas market in April 2017, theCompany plans to expand its customer base by bringing regional operators on board as Group companies throughM&A deals. As the first stage of this, it acquired the gas business operated by Shimonita Town in Gunma Prefecture*and plans to launch services in April 2019.
*	1,336 customers and annual net sales of ¥143mn in FY16

2. Information and communications services business
The information and communications services business, which is conducted by TOKAI Communications Corporation,is comprised of the consumer ISP (Internet service provider) business and mobile business (sales of mobile phones),
and a business to provide communication lines and systems development for corporations. Looking at the percentages of total net sales for FY3/19 3Q cumulative results, the consumer business contributed 61% and thecorporate business 39%.
The ISP business provides the “@ T COM” service for the nationwide service area and the TOKAI Network Club
(TNC) service for the Shizuoka Prefecture service area, and it has the leading share within Shizuoka Prefecture of
approximately 23%. In addition, from February 2015 it launched the Hikari Collaboration service (@TCOM Hikari and
TNC Hikari services), in which it receives wholesale provision of optical lines from NTT <9432> and provides its own
optical (hikari) Internet connection service. As of the end of December 2018, the Company had 430,000 customers
using its existing ISP service and 328,000 customers using its Hikari Collaboration service and customers are shifting
toward Hikari Collaboration. The two services have a total of 758,000 customers. This number has steadily declined
from 863,000 as of the end of March 2015, immediately after the Hikari Collaboration service was launched. Thisdecline has occurred because customers have been leaving the service at a faster pace than new customers canbe enrolled, as major mobile phone carriers conduct sales of service bundles at discounted prices, including mobile
phone fees, making use of NTT’s wholesale optical line business.

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Business overview

The mobile business operates 12 mobile phone stores, mainly within Shizuoka Prefecture, as a sales agency ofSoftbank Corp <9434>, and as of the end of December 2018, it had 220,000 customers. The number of customers
has continued to gradually decline from a peak of 236,000 as of the end of March 2016. Also, in February 2017 theCompany began sales of LIBMO, which is a low-cost smartphone service, as an MVNO business*. The number of
LIBMO customers had steadily increased to 39,000 at the end of December 2018.
*	M VNO (Mobile Virtual Network Operator): Operators who provide services by borrowing other companies’ wirelesscommunication infrastructure, such as for mobile phones.

3. CATV businessIn the CATV business, the Company provides services in Tokyo and five prefectures: Shizuoka, Kanagawa, Chiba,
Nagano and Okayama. Currently, the CATV business is undertaken by nine Group companies. As of December
31, 2018, the number of customers stood at 785,000 for broadcasting services and 270,000 for communications
services, bringing the total to 1,055,000 customers. In terms of the market share of CATV viewing households, theCompany holds a market share of approximately 3%, making it the sixth largest player in Japan’s CATV industry.
Going forward, the Company’s strategy is to continue increasing its market share through proactive M&As.
4. Building and real estate businessIn this business, TOKAI Corporation engages in the construction and design of detached housing, multi-dwellinghousing, stores, and office buildings. It also provides a building management service, sells home facilities andequipment, provides a security service (classified in the gas and petroleum business), operates insurance agencies(classified in other businesses), and develops and trades real estate. In addition, TOKAI Corporation and Tokai Gas
Corporation are developing a renovation business.
5. Aqua businessThis business began in 2007 when the Company launched a bottled water home delivery service in Shizuoka
Prefecture. It provides a returnable bottle service in Shizuoka Prefecture, while in 2011 it also launched a one-way(non-returnable, disposable) bottle service in areas other than Shizuoka Prefecture. It bottles Mt. Fuji natural springwater at two factories in Shizuoka Prefecture that have a total production capacity of approximately 180,000
customers. The Company had 157,000 customers at the end of December 2018. The overall industry had 3,850,000
customers as of the end of 2018, giving the Company a share at around 4%.
6. Other businesses
Other businesses include a nursing care business operated by TOKAI LIFE PLUS CORPORATION, a wedding
ceremony business by TOKAI City Service Corporation, and a shipbuilding and repairs business by Tokaizosen-unyu
Corporation. The Company launched the nursing care business in 2011, and as of December 2018, it operated
six day service facilities, a short stay facility, and a paid-for nursing home in Shizuoka Prefecture. In addition, it has
opened two care plan centers. For its wedding ceremony business, it operates one facility in Shizuoka Prefecture.

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05 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/██Results trends
Achieved sales and profit growth as the decrease in profits in the
LP gas business was outweighed by increases in profits in otherbusiness segments
1. Overview of the FY3/19 3Q cumulative results
Looking at consolidated performance for FY3/19 3Q cumulative results, the Company posted higher sales andprofits YoY. Net sales increased 3.5% YoY to ¥137,943mn, operating profit rose 7.0% to ¥7,038mn, recurring profit
increased 8.8% to ¥7,247mn, and net income attributable to owners of the parent increased 15.5% to ¥3,966mn.
Net sales were a new record high for a 3Q cumulative period. This was mainly because, as a result of the active
investment in upfront costs in FY3/18, at the end of FY3/19 3Q the number of Group customers had increasedby 59,000 on the end of the previous fiscal year to 2,898,000 customers, mainly in the CATV, LP gas, and Aqua
businesses. Looking at the customer numbers compared to the forecasts, they were below forecast in the LP gas
business, LIBMO business, and consumer information and communications services business, which includes themobile business. However, these below-forecast results were exceeded by the pace at which customers increased
above forecast in the CATV and Aqua businesses.
Looking at the factors causing operating profit to change, the decrease factors were the decline in the LP gas sales
volume to households due to warmer weather than in a typical year (¥400mn) and the rise in LP gas purchase costs(¥1.6bn), while the increase factors were the effects of the higher sales from the rise in the number of customers(¥1.6bn), lower costs to acquire customers and to prevent contract cancellations (¥700mn), and the improvementin earnings of LIBMO (¥200mn), which was launched in the same period in the previous fiscal year. Compared to theCompany forecasts, it seems that the results were slightly above forecast in each of the CATV, Aqua, and building
and real estate businesses, but below forecast in the LP gas business (around ¥1.4bn). Therefore in total, the result
was approximately ¥1.1bn below forecast.
FY3/19 3Q cumulative consolidated results(¥mn)
FY3/183Q

FY3/193Q

Results% of sales

Results% of sales

Net sales

133,336-

137,943-

Cost of sales

79,175

59.4%

83,616

60.6%

5.6%

SG&A expenses

47,58135.7%

47,289

34.3%

-0.6%

Operating profit

6,579

4.9%

7,038

5.1%

7.0%

Recurring profit

6,662

5.0%

7,247

5.3%

8.8%

Extraordinary incom (loss)

-689

-

-491

-

-

Net income attributable to owners of the parent

3,435

2.6%

3,966

2.9%

15.5%

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

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

06 18

YoY
3.5%

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Results trends㻲㼍㼏㼠㼛㼞㼟㻌㼎㼑㼔㼕㼚㼐㻌㼏㼔㼍㼚㼓㼑㼟㻌㼕㼚㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼒㼛㼞㻌㻲㼅㻟㻛㻝㻥㻌㻟㻽㻌
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Source: Prepared by FISCO from the Company’s results briefing materials

In FY3/19, the Company has started various measures on the theme of ABCIR+S as a way to utilize new service
technologies that will lead to the next generation of businesses. Specifically, in October 2018, it began providing
the TLC Points App, which is a smartphone app that aims to improve the convenience of the TLC member service*
by enabling TLC points to be confirmed, used, and exchanged on the app. In addition, the app enables prompt
confirmation of services-related information and other information sent by the Company Group. Going forward also,
the plan is to work to further improve convenience through enhancing the app’s functions.
*	Points that are granted to customers by using the Company Group’s services. It is possible to pay for usage fees withpoints and also to exchange the points, such as for other point services and electronic money. Since the launch of theservice in December 2012, the number of members has reached 783,000 as of the end of December 2018.

Also, in October 2018, the Company announced that it will partner with Bsize Inc., to start providing Mimamoru AI
GPS BoT, which is a child safety protection service that utilizes AI and IoT. It is a service that can confirm in real time
the current positional information and movement history on a smartphone app through a small, dedicated terminalthat the child carries. Through the AI learning the daily lifestyle habits of the child, abnormalities are detected whenpatterns of behavior differ from the usual (such as departing from the path usually taken to go to school), and theplan is to add an automatic notification function by the end of FY3/19. The Company intends to actively progressmeasures on the theme of ABCIR+S in the future also.

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07 18

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

TOKAI Holdings Corporation

28-Mar.-2019

3167 Tokyo Stock Exchange First Section

http://www.tokaiholdings.co.jp/english/ir/

Results trends

Major increases in profits in the CATV, Aqua, and building and realestate businesses
2. Trends by business segment
Net sales by segment(¥mn)
FY3/15 3Q

FY3/16 3Q

FY3/17 3Q

FY3/18 3Q

FY3/19 3Q

YoY

Gas and petroleum

67,10658,34851,29153,14554,675

2.9%

Information andcommunications services

30,02031,98836,212

37,76037,9590.5%

CATV

18,207

18,345

18,901

20,871

22,8299.4%

Building and real estate

13,311

13,783

12,926

13,491

13,846

2.6%

Aqua

3,707

4,130

4,391

4,652

5,279

13.5%

Other

3,626

3,507

3,708

3,415

3,352

-1.8%

Total

135,981130,103

127,432

133,336

137,943

3.5%

Operating profit by segment(¥mn)
FY3/15 3Q

FY3/16 3Q

FY3/17 3Q

FY3/18 3Q

FY3/19 3Q

Gas and petroleum

4,376

5,232

5,550

3,857

2,954

-23.4%

Information andcommunications services

3,716

1,472

2,993

2,410

2,595

7.7%

CATV

1,309

1,453

2,125

2,758

3,568

29.4%

349

523

619

681

915

34.4%

Aqua

-1,166

-933

299

221

444

100.9%

Other-3,718-3,741-3,396-3,350-3,442

-

Total

4,866

4,006

8,193

6,579

7,038

7.0%

Building and real estate

YoY*Values are prior to allocating indirect costs and other expenses
Source: Prepared by FISCO from the Company’s results briefing materials

Customer numbers by key services(thousand)End of
FY3/15 3Q

End of
FY3/16 3Q

End of
FY3/17 3Q

End of
FY3/18 3Q

End of
FY3/19 3Q

YoY change

624

629

635

653

674

21

LP gas

571

575

582

599

620

21

City gas

53

53

54

54

55

1

1,099

1,094

1,060

1,047

1,017

-30

866

686

538

478

430

-48

Hikari Collaboration

-

173

288

319

328

9

LIBMO

-

-

-

21

39

18

Mobile

234

235

234

229

220

-9

689

704

728

1,002

1,055

53

Broadcasting services

494

497

506

751

785

34

Communications services

195

207

222

251

270

19

Aqua

133

134

135

143

157

14

Security

18

18

17

17

17

0

2,540

2,553

2,551

2,839

2,898

59

Gas

Information and communications
services
Existing ISP

CATV

Total

* The number of customers below a thousand is rounded to the nearest thousand. Information and communications and CATV both offer
communications services, so total figures avoid duplication.
Source: Prepared by FISCO from the Company’s results briefing materials

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08 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Results trends(1) Gas and petroleum businessIn the gas and petroleum business, net sales increased 2.9% YoY to ¥54,675mn and operating profit, before
the allocation of indirect costs and other costs (same below in this section), decreased 23.4% to ¥2,954mn.
Within these amounts, in the LP gas business, although the household consumption volume per unit declined
due to the weather being warmer than in a typical year, at the end of FY3/19 3Q, the number of customers hadrisen by 21,000 on the end of the previous fiscal year to 620,000. In addition, the Company transferred the risein purchases prices onto its prices, so net sales rose 2.0% to ¥45,790mn. The number of customers steadily
increased in both the new sales areas (north Kanto, south Tohoku, Aichi Prefecture, Gifu Prefecture, Okayama
Prefecture, and Fukuoka Prefecture) and the existing sales areas (including Shizuoka Prefecture and the Tokyo
Metropolitan area). In particular, a point to focus is that in the existing areas, customer numbers grew even though
customer-acquisition costs did not increase.
Meanwhile, in the city gas business, net sales rose 7.6% YoY to ¥8,885mn, partly due to a rise in sales prices,
as well as a slight increase of 1,000 in the number of customers to 55,000.
The main factors behind the decline in operating profit were that, as previously mentioned, the weather was
warmer than in a typical year, so LP gas sales volume per customer to households declined, and also because
raw materials purchase prices rose alongside the high price of crude oil. It would seem that compared to theCompany forecast, operating profit was around ¥1.4bn below forecast.
(2) Information and communications services businessIn this business, net sales increased 0.5% YoY to ¥37,959mn, while operating profit increased 7.7% to ¥2,595mn.
Within these amounts, net sales in the consumer business suffered a downturn, decreasing 2.2% to ¥23,218mn.
Although the number of customers for Hikari Collaboration, which has high monthly revenue, increased by 9,000
on the end of the same period in the previous fiscal year to 328,000, customer numbers for the existing ISP
service and other services decreased sharply by 48,000 to 430,000 due to the intensification of competition withmajor mobile carriers. For the Hikari Collaboration also, the situation has levelled-off since June 2016 due to theintensification of competition to acquire customers. For LIBMO, which is an inexpensive smartphone service,customers increased by 18,000 YoY to 39,000, but this was not enough momentum to stop the overall downward
trend, which is expected to continue for the time being.
Conversely, the corporate business performed steadily, with net sales increasing 5.1% YoY to ¥14,740mn. Sales ofdata communication services trended firmly against the backdrop of the expansion of the cloud services market,
and also sales increased for outsourced systems development with active IT demand from corporate customers.
For operating profit, there was a slight increase for consumers due to the improvement in the earnings of LIBMO,
while for corporate also, it changed direction and increased due to the effects of the higher sales.

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09 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Results trends(3) CATV businessIn the CATV business, net sales increased 9.4% YoY to ¥22,829mn and operating profit rose 29.4% to ¥3,568mn,
which were record high results for a 3Q cumulative period. The Company converted Tokyo Bay Network Co., Ltd.,and TV Tsuyama Inc., into subsidiaries in FY3/18 2Q and 4Q, respectively, and the effects of these M&A were toincrease net sales by approximately ¥1bn and operating profit by around ¥100mn. In addition to the effects of
the M&A, the effects of the sales measures continue to appear, such as the discount service by subscribing toa bundle services for broadcasting and communication and for smartphone through collaboration with a major
mobile carrier, and also the measures to prevent contract cancellations. Therefore, at the end of the current 3Q,
the number of customers had steadily increased for both broadcasting services, up by 34,000 on the end of theprevious fiscal year to 785,000, and for communications services, up by 9,000 to 270,000. Broadcasting-services
customers also increased by 10,000 on the end of the end of the previous fiscal period, of which, Tokyo Bay
Network contributed 5,000 customers. Tokyo Bay Network’s service areas are Koto Ward and Chuo Ward, andthese are popular areas even within Tokyo whose populations continue to increase. So we will be paying attention
to their results as areas in which customer numbers are expected to increase in the future also.
In profits, in addition to the effects of the higher sales, the decrease in depreciation expenses was also a factor
behind the increase in profits. The operating profit margin rose from 13.2% in the same period in the previous
fiscal year to 15.6%, which was mainly due to the effects of the higher sales, and also that in the existing areas,
the broadcasting and communications set contract rate and earnings per customer are rising.
(4) Building and real estate businessIn the building and real estate business, net sales increased 2.6% YoY to ¥13,846mn and operating profit rose
34.4% to ¥915mn. The main reason for the higher sales and profits was that orders in the renovaton businessgrew due to the strengthening of the sales structure in the Shizuoka area.
(5) Aqua businessIn this business, net sales increased 13.5% YoY to ¥5,279mn, while operating profit increased 100.9% to ¥444mn,
marking the sharp increase in sales and profits. The Company worked actively to acquire customers, including
those at large-scale commercial facilities, and the customer numbers had increased by 14,000 on the end of thesame period in the previous fiscal year to 157,000 customers, which was the main reason for the higher sales
and profits. As a new initiative, the Company has concluded a business-alliance agreement with TOELL Co.,
Ltd. <3361>, a peer company in the bottled water delivery industry effective November 1, 2018, with the aim of
streamlining delivery operations and enhancing service quality in the home water delivery business in the Kantoarea, and it has outsourced deliveries of its product to TOELL. TEOLL has 250,000 customers in the Kanto areaand has constructed its own delivery system. The alliance has the benefit that it will improve the efficiency of thedelivery service through delivering the Company’s products at the same time.
(6) Other businesses and adjustments
In the other businesses, net sales decreased 1.8% YoY to ¥3,352mn. Breaking this down, in the nursing carebusiness, sales increased 3.7% to ¥806mn alongside the increase in the number of facility users, and its operating
loss continued to improve. In the wedding ceremony business, the number of wedding ceremonies declined andnet sales fell 4.4% YoY to ¥1,081mn, while in the shipbuilding business, the volume of ship repair work fell andnet sales decreased 3.6% to ¥937mn and operating profit also declined. This segment’s operating loss, includinginternal adjustments, slightly worsened to ¥3,442mn (a loss of ¥3,350mn in the same period in the previous fiscal
year).

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10 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

Results trends

3. Financial position
Looking at the financial condition at the end of FY3/19 3Q, total assets were up ¥1,042mn on the end of the previous
fiscal year to ¥167,035mn. Investment and other assets decreased ¥1,208mn, mainly due to the decline in valuationdifference on investment securities. Property, plant and equipment fell ¥647mn, but there were increases in cash
and deposits of ¥968mn, inventory assets of ¥971mn, and other under current assets of ¥1,509mn, including due
to a rise in guarantee deposits.
Income taxes payable decreased ¥1,994mn, provision under current liabilities declined ¥1,453mn, including due tothe payment of bonuses, and notes and accounts payable-trade fell ¥1,296mn, while interest-bearing debt increased¥7,501mn. As a result, total liabilities were up ¥2,860mn on the end of the previous fiscal year to ¥107,404mn.
Total net assets were down ¥1,818mn on the end of the previous fiscal year to ¥59,631mn. This was mainly due
to decreases of ¥1,082mn in valuation difference on available-for-sale securities and ¥966mn in deferred gains orlosses on hedges.
The equity ratio, which indicates financial soundness, stood at 35.0%, a slight decline from the end of the previous
fiscal year. Under the medium-term management plan currently under way, the Company plans to proactively execute
growth investments including M&As. The Company expects to keep the equity ratio at the 30% level.
Consolidated balance sheets(¥mn)
Total assets(Cash and deposits)
Total liabilities

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19 3Q

Change165,702160,303

161,112

165,993167,035

1,042

2,861

4,077

3,239

3,143

4,111

968

122,234

118,332

104,665

104,543

107,404

2,860

73,114

71,41054,13750,98058,481

7,501

Net assets

43,467

41,97056,44661,45059,631-1,818Equity ratio

25.7%

25.6%

34.5%

36.3%

35.0%

-1.3pt(Interest-bearing debt)

Source: Prepared by FISCO from the Company’s financial results██Outlook
In FY3/19, the active investment to increase customer numbers isproving successful and the outlook is for record high profits for the
first time in two fiscal periods
1. Outlook for FY3/19
For FY3/19 consolidated performance outlook, the Company has left its initial forecasts unchanged projecting net
sales to increase 5.1% YoY to ¥195,600mn, operating profit to increase 27.2% to ¥13,960mn, recurring profit toincrease 24.0% to ¥13,880mn, and net income attributable to owners of the parent to increase 19.6% to ¥7,920mn.
Net sales are forecast to increase for the second consecutive fiscal year and to achieve a record high for the first timein five fiscal years. The Company expects higher earnings from increased sales following expansion in the numberof Group customers and from lower promotion costs and costs to prevent contract cancellation.

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11 18

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

TOKAI Holdings Corporation

28-Mar.-2019

3167 Tokyo Stock Exchange First Section

http://www.tokaiholdings.co.jp/english/ir/

Outlook

Outlook for FY3/19 consolidated performance(¥mn)
FY3/18Results

FY3/19% of sales

Full-year
forecast% of sales

YoY

Net sales

186,069-

195,600-

5.1%

Operating profit

10,971

5.9%

13,960

7.1%

27.2%

Recurring profit

11,191

6.0%

13,880

7.1%

24.0%

Net income attributable toowners of the parent

6,620

3.6%

7,920

4.0%

19.6%

Net income per share (¥)

51.19

60.48

Source: Prepared by FISCO from the Company’s financial results㻲㼍㼏㼠㼛㼞㼟㻌㼑㼤㼜㼑㼏㼠㼑㼐㻌㼠㼛㻌㼕㼙㼜㼍㼏㼠㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼕㼚㻌㻲㼅㻟㻛㻝㻥

㻔¥㼎㼚㻕

㻝㻠㻚㻡
㻝㻠㻚㻜
㻝㻟㻚㻡

Increase in the number ofcustomers, etc.
Gas +¥0.9bn
CATV +¥0.6bn
Expansion of Gas
Hikari Collaboration +¥0.1bn operation area
Corporate communications Bases -¥0.1bn+¥0.5ｂn

㻙㻜㻚㻝

㻝㻟㻚㻜
㻝㻞㻚㻡
㻗㻞㻚㻝

㻝㻞㻚㻜

Contract
cancellation
prevention costsGas +¥0.5bn

㻗㻜㻚1

㻗㻜㻚㻡
㻗㻜㻚㻠

LIBMO sales
promotion costs+¥0.4bn

Other㻵㼚㼒㼛㼞㼙㼍㼠㼕㼛㼚 +¥0.7ｂ㼚㻯㼛㼚㼟㼡㼙㼜㼠㼕㼛㼚㻌㼢㼛㼘㼡㼙㼑㻙¥0.3ｂ㼚㻻㼠㼔㼑㼞 㻙¥0.3ｂ㼚

㻝㻠㻚㻜

㻝㻝㻚㻡
㻝㻝㻚㻜
㻝㻜㻚㻡

㻝㻝㻚㻜

㻝㻜㻚㻜
㻲㼅㻟㻛㻝㻤
㼞㼑㼟㼡㼘㼠㼟

㻲㼅㻟㻛㻝㻥
㼒㼛㼞㼑㼏㼍㼟㼠

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

In order to achieve the full fiscal year forecasts, in 4Q it will be necessary to increase 9.3% YoY to ¥57,657mn in net
sales and 57.6% to ¥6,922mn in operating profit. Although these are high hurdles, it is thought that the Company
still intends to achieve them, as profitability is expected to improve in the LP gas business, including from theimplementation of price increases for households in January 2019 to minimize the impact of the rise in purchasecosts, and also from the further growth in the businesses that are performing strongly, including the CATV, Aqua, andcorporate information and communications services businesses. At FISCO, we think that it is possible that results
will be slightly less than forecast, including due to the impact of the warm weather in the LP gas business, but thatsales and profits could still increase and that profits could achieve a new record high.
At the end of FY3/19, the number of Group customers is forecast to have increased by 65,000 on the end of theprevious fiscal year to 2,941,000 customers. The rate of progress for this up to the end of 3Q was slightly below
forecast, and the Company will need to increase by 43,000 in 4Q. It is highly possible that the forecast will not be
achieved due to the impact of the below-forecast performance of LIBMO.

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

12 18

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

TOKAI Holdings Corporation

28-Mar.-2019

3167 Tokyo Stock Exchange First Section

http://www.tokaiholdings.co.jp/english/ir/

Outlook

Looking at the earnings outlook for the main businesses, the initial outlook for the gas and petroleum business wasfor a double-digit increase in profits, but the forecast for the full fiscal year is now for a slight fall in profits due tothe impact of the lower profits up to 3Q. For customer acquisition, the Company will work to further accumulate
customers in the existing areas, while in addition, it is focusing on acquiring new customers in Okayama Prefectureand Gifu Prefecture, which it entered-into in FY3/18, and in Fukuoka Prefecture, which it entered-into in June
2018. It has decided to newly enter-into Mie Prefecture in April 2019, and it also plans to enter-into Aisai City, Aichi
Prefecture, during FY3/20. Going forward, the aim is to grow earnings by expanding the service areas and also themarket shares in existing areas.
Within the information and communications services business, consumer net sales were initially forecast to increaseby a single digit, but customer numbers have been trending below forecast and it is highly possible that sales will
decrease by a single digit for the full fiscal year. Profits are expected to increase slightly due to the reductions
to LIBMO sales promotion costs and other costs. On the other hand, for corporate, against the backdrop of
the expansion of the cloud services market, both sales and profits are forecast to increase from the continuing
favorable performance of data communication connection services and also the strong orders for outsourced
systems development.
In the CATV business, the Company will work to increase the number of customers by continuing to sell service
bundles based on tie-ups with mobile phone carriers. In addition, the Company will raise the multiple contract
rate for broadcasting and communications services based on its strengths in being able to provide high-speed
communications services leveraging its proprietary optical fiber network. Through these measures, the Company isforecasting a double-digit increase in operating profit in the CATV business.
In the Aqua business, the Company is aiming for double-digit increases in sales and profits by further accumulating
customer numbers through store front demonstration sales, including at large commercial facilities. It seems that theweeding-out of some business entrants is beginning to make progress in the bottled water home delivery industry,
which is being viewed as an excellent opportunity to increase market share.
Net sales by segment(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18Gas and petroleum

93,06780,74573,34476,073

Information and communications services

40,11844,24649,50850,894

CATV

24,35924,60825,39628,386

Building and real estate

20,01920,975

19,511

19,807

Aqua

4,959

5,487

5,762

6,200

Other

4,987

4,875

5,108

4,706

Total

187,511

180,940

178,631

186,069

Operating profit by segment(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18Gas and petroleum

7,679

8,991

9,161

7,364

Information and communications services

4,956

2,308

4,213

3,174

CATV

1,669

1,975

2,752

3,554

Building and real estate

1,029

1,266

1,098

1,330

Aqua

-1,313-1,119298

246

Other businesses and adjustments-5,016-5,175-4,775-4,699

Total

9,003

8,245

12,75010,971*Values are prior to allocating indirect costs and other expenses
Source: Prepared by FISCO from the Company’s results briefing materials

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

13 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

OutlookAim for more than 4,320,000 Group customers and consolidated
operating profit of ¥22.5bn for FY3/21 by advancing the M&A
strategy
2. Medium-term management plan
(1) Basic policy and activities
In the new medium-term management plan (IP20) launched in FY3/18, the Company sets out its basic strategy
of prioritizing topline growth and switching from defensive to proactive management. By the end of FY3/21, it willproactively conduct M&A and form alliances that will lead to the expansion of its customer base, and it plans to
conduct strategic investment worth a total of ¥100bn.
The candidates for M&A are companies that have a customer base in its core businesses, including gas, CATV,
and information and communications services, and it is also targeting companies in areas peripheral to its existing
lifestyle-related services. The Company is currently investigating and negotiating with several candidate companies.The Company is also working on creating new businesses utilizing advanced technologies on the theme of
ABCIR+S, and it has established the Next-Generation Business Strategy Headquarters as a dedicated organizationand is progressing an investigation of an ABCIR+S utilization model (including to create new businesses, toincrease the sophistication of customer contact points, and for an information-utilization strategy) horizontally
across the Group. For these advanced technologies, it is investigating using M&A to acquire companies that havetechnologies and expertise that it does not possess itself.
In the information and communications services field, the Company converted Cyze Inc.* into a consolidated
subsidiary in September 2018. Cyze develops and provides online survey systems as its core business. In
addition, the Company concluded a capital and business alliance with Tripleize Co., Ltd., a startup with strengths
in cutting-edge technologies such as IoT, AI and blockchain. The purpose of converting Cyze into a subsidiaryis to strengthen the Group’s digital marketing strategy using Cyze’s data collection solutions. As one digitalmarketing strategy, in October 2018 the Company began providing the TLC Points App. For the future, during
FY3/20 it plans to build a platform toward realizing the maximization of earnings per customer through analyzing
customers’ Big Data (behavior history) collected through the smartphone app and the websites of each service,and by implementing optimized digital marketing measures tailored to each customer’s attributes and preferences.
It is thought that this project will contribute to this also. With regard to Tripleize, the Company intends to expand
the systems development business and create synergies in areas such as the development of new businesses
and services by working to further strengthen its relationship with Tripleize by forming a capital alliance. Previously,
the Company had partnered with Tripleize in the system development business.
*	Cyze posted net sales of ¥179mn and operating profit of ¥36mn in FY11/17. The Company’s shareholding ratio in Cyzeis 100%.

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

14 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

OutlookCreation of synergies in the information and communications services field

Source: The Company’s results briefing materials

In other areas, in August 2018 the Company entered into a capital and business alliance with Minna-Denryoku,
Inc., a new electric power producer and supplier, and it has started to explore possibilities for entering therenewable energy field. Initially, it established a wholly owned subsidiary in April 2019 to conduct electricity sales
and related activities, and it is progressing a detailed investigation into the extent of the needs for renewableenergy. First, it will conduct sales within Shizuoka Prefecture targeting companies that are strengthening theirmeasures for ESG (Environment, Society, Governance) and subsequently, it is expected to expand its sales area
to the areas in which the Company Group is developing its businesses.
(2) Targets for management indicators
The numerical management targets set in the medium-term management plan for FY3/21 are consolidated net
sales of ¥339.3bn, operating profit of ¥22.5bn, net income attributable to owners of the parent of ¥11.5bn, andROE of 13.0%. Looking at the levels of these targets compared to FY3/18, the Company is targeting increasesof 1.8 times in net sales, 2.0 times in operating profit, and 1.7 times in net income attributable to owners of theparent. It is considered that, while utilizing M&A, the Company is aiming to achieve these targets by increasing thenumber of Group customers by more than 1.5 times to over 4,320,000, and also by raising the multiple contract
rate from around 14% as of the end of FY3/18 to around 20%.
Financially, interest-bearing debt is expected to increase as the Company conducts investment of ¥100bn toaccelerate M&A and alliances. Looking at the interest-bearing debt / EBITDA (operating profit + amortization
expenses, including goodwill expenses) ratio, although it will increase slightly, from 1.9 times in FY3/18 to 2.6
times in FY3/21, the equity ratio will be kept at the 30% level and financial soundness will be maintained. The
Company conducted normal capital investment excluding M&A expenses of ¥12.6bn in FY3/18 and plans anannual level of ¥14bn from FY3/19 onwards.

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

15 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/

OutlookFinancial targets in Innovation Plan 2020
FY3/21

FY3/18results

FY3/19forecast

FY3/20forecast

Targets

vs. FY3/18

Net sales (¥bn)

186.1

202.0

224.4

339.3

1.8x

Operating profit (¥bn)

11.0

14.0

16.2

22.5

2.0x

Net income attributable to owners of the parent (¥bn)

6.6

7.9

8.7

11.5

1.7x

166.4

173.8

191.2

283.4

1.7x

Interest-bearing debt/EBITDA (ratio)

1.9

1.7

1.8

2.6

Equity ratio (%)

36.3

35.6

34.9

31.6

ROE (%)

11.4

12.8

13.0

13.0

Number of customers (million contracts)

2.88

2.99

3.72

Over 4.32

Total assets (¥bn)

Over 1.5x

Source: P repared by FISCO from the Company’s results briefing materials and the Company’s Medium-Term Management Plan (May 9, 2017)██Shareholder return policy
Remaining firmly committed to continuously paying a stabledividend
The Company returns profits to shareholders by paying dividends, presenting shareholders with gifts, and alsopurchasing treasury shares depending on conditions. Its basic policy is to continuously pay a stable dividend andit targets a dividend payout ratio of 40% to 50%. The FY3/19 dividend per share will be unchanged YoY at ¥28.0(for a dividend payout ratio of 46.3%). But the Company will also determine the dividend while considering trends
in results and its demand for capital.
The Company presents gifts to shareholders at the end of March and September depending on the number of shares
held. For each unit of shares (100 shares) held, shareholders can receive one of the following gifts: an Aqua productworth ¥2,050 (such as the Ulunom) “Fuji-no-Tennensui Sarari” (Mt. Fuji natural water), a QUO card worth ¥500, food
coupons worth ¥1,000, ¥1,000 worth of TLC Membership Service points, or a ¥2,100 discount on LIBMO usage
fees. When including the gifts to shareholders in an estimate of the total investment yield per share unit from thecurrent share price level (¥937 on February 27, 2019), it is in the range of 4% to 7% (depending on the selection ofeither a QUO card or an Aqua product as the gift).

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

16 18

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

TOKAI Holdings Corporation

28-Mar.-2019

3167 Tokyo Stock Exchange First Section

http://www.tokaiholdings.co.jp/english/ir/

Shareholder return policy㻰㼕 㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍 㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛(¥)

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

㻟㻜㻚㻜
㻠㻢㻚㻣

㻞㻡㻚㻜

㻠㻢㻚㻟

㻠㻟㻚㻠

㻟㻡㻚㻝

㻞㻜㻚㻜

（㻑）
㻢㻜㻚㻜

㻡㻠㻚㻣

㻡㻜㻚㻜

㻠㻜㻚㻜

㻝㻡㻚㻜

㻞㻤㻚㻜㻌

㻞㻤㻚㻜㻌

㻞㻤㻚㻜㻌

㻝㻜㻚㻜

㻟㻜㻚㻜
㻞㻜㻚㻜

㻝㻞㻚㻜㻌

㻡㻚㻜

㻝㻠㻚㻜㻌
㻝㻜㻚㻜

㻜㻚㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥㻌㻱

* Including a commemorative dividend of ¥6 in FY3/17
Source: Prepared by FISCO from the Company’s financial results

Shareholder gifts
Shareholders on record at the end of March and September are presented with their choice of one of thefollowing five type of gifts, as well as a 10% discount coupon for a standard wedding service at the Group’s
wedding halls and a dining certificate and 20% discount coupon for the Beau Ciel and Aoi restaurants.
Shares held

100-299 shares300-4,999 sharesOver 5,000 shares

Aqua product¥2,050 worth¥4,100 worth¥8,200 worth¥500 worth¥1,500 worth¥2,500 worth

Beau Ciel dining certificate¥1,000 worth¥3,000 worth¥5,000 worth

TLC Points¥1,000 worth¥2,000 worth¥4,000 worth

LIMBO monthly usage fee¥2,100 worth¥5,100 worth¥11,280 worth

QUO card

Source: Prepared by FISCO from the Company website██ESG
Has been adopted as a constituent issue of the MSCI Japan ESG
Select Leaders Index
In addition, from December 2018 the Company’s shares were adopted as a constituent issue of the MSCI JapanESG Select Leaders Index, which is provided by MSCI Inc., of the United States. This index is comprised ofcompanies within the MSCI Japan IMI top 700 issues that have been selected as having excellent initiatives for
ESG, and the Government Pension Investment Fund (GPIF) had selected it as one ESG index for when conducting
passive management. The constituent issues of this index are regularly reviewed by MSCI based on factors suchas the ESG ratings and market capitalization, and the Company’s issue was newly included in it following the recent
review. It is expected that its inclusion in this index will contribute to the further expansion of its investor base andto improved liquidity.

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

17 18

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

TOKAI Holdings Corporation
3167 Tokyo Stock Exchange First Section

28-Mar.-2019
http://www.tokaiholdings.co.jp/english/ir/██Information security measures
In terms of information security measures, previously each Group company had separately managed the personal
information held and conducted measures against system failures and cyber-attacks. Since FY3/18, the Company
has established a Group-wide expert committee in order to share information between all the Group companies
and at the same time, to heighten awareness of its security measures.

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

18 18

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
properties of the Tokyo Stock Exchange, and therefore all rights to them belong to the Tokyo
Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment or
any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content of
this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.