fy2020 3q supplementary materials for financial …...→ accelerated shift to digital crowded...
TRANSCRIPT
FY2020 3QSupplementary Materials for Financial Results Ending June 30,2020
May 15, 2020(TSE Mothers: 3135)
1. Social Issues around us and Growth Strategy
2. FY2020 3Q Financial Results
3. Summary of Businesses by Segment・ Second-hand online business・ Media business・ Mobile & telecommunications business
4. Earnings Forecast for FY 2020
Contents
2
1. Social Issues around us and Growth Strategy
2. FY2020 3Q Financial Results
3. Summary of Businesses by Segment・ Second-hand online business・ Media business・ Mobile & telecommunications business
4. Earnings Forecast for FY 2020
Contents
3
New Social Issues Facing the Company
MarketEnterprise has been preparing for a digital shift through investment in Oikura systems, strengthening our media business, M&A, and more.
“New Lifestyle” for curbing spread of COVID-19→ accelerated shift to digital
Crowded places: gathering in offices to workClosed spaces: avoiding closed-off places
Close contact: store-based sales and door-to-door sales Online marketing
Telecommuting
4
Social Issues Facing Company & Areas of Focus
Online marketing
・Oikura helps second-hand brick and mortal shops throughout Japan
・Actively entering areas with less online presence → strengthening agricultural equipment field
Telecommuting
Our company is prepared to incorporate customer demand for a digital shift
Second-hand online
business
Media business
・Using in-house media to support online marketing
Mobile &telecommunicationbusiness
Building communication environment for working athome→ supporting spread of WiMAX service
5
Supporting Digital Shift (1): Second-Hand Online Business “Oikura”
A platform helping second-hand shops around Japan attract customers
6
They can negotiate freely with the seller based on the information provided.
Sellers (General consumers)
Find the store they
want to sell
Purchase request through
Website
Purchase request by
phone
Visit the second-hand brick-and-mortar shop to see the map
Purchasers (nationwide member stores of Oikura)
Recycle shops
Brand goods stores
Antique shops
Stores specializingin purchases
Second-handonline shops
Pawn shops
Jewelry shops
Second-handclothing shops
Auctionrepresentation shops
Second-handbook/game stores
Negotiate with sellers
Digital shift leading to increase in number of customers transferred
0
10000
20000
30000
2019Jan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020Jan
Feb Mar Apr
(unit: no. of customers)Oikura - customers transferred per month
7
Supporting Digital Shift (1): Second-Hand Online Business “Oikura”
32
4144 42
51
0
20
40
60
3Q FY2019 4Q 1Q FY2020 2Q 3Q
Third quarter net sales increased due to investments in systems, such as improving customer-transfer logic. Preparations are complete for full-scale capture of demand.
(unit: millions of yen)Net sales - Oikura
8
Supporting Digital Shift (1): Second-Hand Online Business “Oikura”
Promoting a Digital Shift (2): Agricultural Equipment
Targeting a B to B market which has been slow to shift online
9
For C to C4.4 trillion yen
• Clothing and accessories• Books• Daily necessities and
sundries• Software and media• Baby & children’s goods• Other
• 4 major household appliances• Cameras and accessories• Computers and peripherals• Mobile phones/smartphones• Toys and models• Bicycles, bicycle components, and
parts• Brand-name goods• Furniture• Other
Our target3.2 trillion yen
*Source: Ministry of Economy, Trade and Industry, “FY2018 Infrastructure Development for a Data Driven Society in Japan (Market Survey on Electronic Commerce)”*Source: Monetary values obtained by multiplying 30% future used goods ratio by data from the following sources; agriculturalequipment: Ministry of Agriculture, Forestry and Fisheries, Construction machinery: Japan Construction Equipment Manufacturers Association, Medical devices: “Pharmaceutical Industry Production Trend Statistics” (annual report).
B to B market
1.3 trillion yen + α
• agricultural equipment• Construction
machinery• Medical devices• Other
Our market: 4.5 trillion yen + α
Conversion rate to EC is only 2.0% for agricultural equipment. Major room for market expansion.
Source: Japan Agricultural Machinery Manufacturers Association, “Shipments Made in 2019 (Final Numbers)”Ministry of Finance Customs Statistics, “Agricultural Machinery Exports” and “Agricultural Machinery Imports”EC sales amounts based on our company’s estimates
Scale of domestic market
for agriculturalequipment
536.3 billion yen
EC conv. rate2.0%
10
Promoting a Digital Shift (2): Agricultural Equipment
63
10288
109130
159 150
0
50
100
150
200
1Q FY2019 2Q 3Q 4Q 1Q FY2020 2Q 3Q
Agricultural equipment buying and selling business expanding steadily
(unit: millions of yen)
1.7xon a YoY basis
Change of our agricultural equipment sales
11
Promoting a Digital Shift (2): Agricultural Equipment
Newly-established subsidiary ME Trading acquired agricultural equipment business from OHO Trading, an overseas exporter of used agricultural equipment (announced April 28, 2020)
Overseas exports70%
Sales in 80 countries
Domestic sales30%
New Subsidiary ME Trading Co., Ltd.
Sales Office Locations Tottori City, Tottori; Oyama City, Tochigi
Business Description
Purchasing, sales, and overseas export of used agricultural equipment
Media Managed
Manages agricultural equipment purchasing mediaNokigu kaitori.com (“agricultural equipment purchasing” dot com), kautora.net,membership-based overseas sales site FARM MART
Track Record
Promoting a Digital Shift (2): Agricultural Equipment
6981.2 billion yen (CY2019 results)
Number of member farmers
New Subsidiary UMM Co., Ltd.
Location Tokyo
Business Description
Planning and management of marketplace for used items, focusing on agricultural equipment
The name “UMM” is an acronym for “Used Machine Market,”based on our desire to create a marketplace for providing quality Japanese used agricultural equipment to both the domestic and foreign markets.
Newly-established subsidiary UMM acquired JUM, one of Japan’s largest online marketplaces specializing in used agricultural equipment(announced May 15, 2020)
Total registered agricultural equipment businesses
Gross merchandise volume (GMV)
13
Promoting a Digital Shift (2): Agricultural Equipment
4,574
Supporting Digital Shift (3): Media Business
Helping advertisers attract customers through in-house media
14
Users
Active searches Provide information
Transfer customers Advertising income Transfer customers
Our media group
Advertisers (corporations) Convert into customers through another our services
0
5
10
15
2018
Jan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019
Jan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020
Jan
Feb Mar Apr
(unit: million PV)
Using our own management know-how leading to increased page views (PV)Also captured demand from “staying home” in response to call to refrain from going out
April total
14.48 million PVMonthly PV changes
2019 JanAcquired
OUTLET JAPAN
2019 AugAcquired
SIMCHANGE
2020 FebAcquired
Saiyasu-Syuuri.com
15
Supporting Digital Shift (3): Media Business
Telecommunications
Acquired businesses offering customer attraction support services for repair shops.Currently expanding business domains.
Second-hand Repair
Lifestyle
(Acquired in Feb 2020)16
Supporting Digital Shift (3): Media Business
26.0%
14.4%
28.2%
57.1%
19.5%
17.9%
24.6%
14.3%
54.4%
67.7%
47.2%
28.6%
All
Less than 50
50 -300
More than300
Implemented Under consideration No plan to implement
Around 1/4 of companies using telecommuting, even in Tokyo
Supporting Digital Shift (4): Mobile & Telecommunications Business
26.0%
30.1%
26.2%
25.2%
60.0%
31.3%
16.4%
16.6%
25.7%
53.8%
19.5%
16.4%
25.0%
17.5%
20.0%
25.0%
17.8%
17.6%
17.0%
26.4%
54.4%
53.4%
48.8%
57.4%
20.0%
43.8%
65.8%
65.9%
57.3%
19.8%
All
Commerce/retail
Wholesale
Industry/manuf.
Trade
Finance
Transport/dist./warehousing
Construction/real estate
Service
Information/comm.
Implemented Under consideration No plan to implement
Telecommuting implementation status - by no. employees Telecommuting implementation status - by industry
Source: Tokyo Chamber of Commerce and Industry, “Response to Novel Coronavirus”17
Issues in developing a network environment for telecommuting
9.8%6.7%
29.3%
17.7% 17.7% 13.8%
38.8%
56.3%
9.4%4.7% 4.0%
33.2%
27.1% 27.1%
13.0%
48.7% 48.4%
12.3%
0.0% 0.0%
41.0%
27.7% 27.7%
9.6%
42.2%47.0%
12.0%
Not sure how
to get started
No w
orkers with IT know
ledge
Insufficient devices (PCs, smartphones), netw
ork environment, etc.
Insufficient software developm
ent, e.g., cloud
Concerned about security
Difficulty covering overhead costs
In-house systems not ready
(work & labor m
anagement, evaluation, etc.)
Work not am
enable to telecomm
uting
Other
Less than 50
50 - 300
More than 300
Not sure how
to get started
No w
orkers with
IT knowledge
Insufficient devices (PCs,
smartphones)
, network environm
ent,etc.
Insufficient software
development, e.g.,
cloud
Concerned
about security
Difficulty covering
overhead costs
In-house systems not ready
(work & labor m
anagement,
evaluation, etc.)
Work not am
enableto telecom
muting
Other
Source: Tokyo Chamber of Commerce and Industry, “Response to Novel Coronavirus”
Issues when considering implementation of telecommuting - by no. of employees
18
Supporting Digital Shift (4): Mobile & Telecommunications Business
Major jump in number of retained lines in April. Demand expected to hold steady for a while.
0.1 0.2 0.51.0
1.52.0
2.63.3
4.14.5 4.5 4.6 4.8
2017End Sep
End Dec 2018End Mar
End Jun End Sep End Dec 2019End Mar
End Jun End Sep End Dec 2020End Jan
End Feb End Mar End Apr
Change in no. of retained lines
No. of contracts (end of Apr)
55,000(unit: 10 thousands)
19
Supporting Digital Shift (4): Mobile & Telecommunications Business
1. Social Issues around us and Growth Strategy
2. FY2020 3Q Financial Results
3. Summary of Businesses by Segment・ Second-hand online business・ Media business・ Mobile & telecommunications business
4. Earnings Forecast for FY 2020
Contents
20
Changes in Consolidated Financial Results - 3Q Cumulative
4,088 4,455
5,999
7,885
0
2,000
4,000
6,000
8,000
3Q FY2017 3Q FY2018 3Q FY2019 3Q FY2020
Net sales
(57) 26
285 443
-1.4%0.6%
4.8%
5.6%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
(200)
0
200
400
600
800
3Q FY2017 3Q FY2018 3Q FY2019 3Q FY2020
Operating profit/operating profit ratio(unit: millions of yen)
(unit: millions of yen)
3Q of FY 2020(Cumulative)
Net sales
Operating profit
7,885 million yen (increased by 31.4% YoY)
443 million yen (increased by 55.2% YoY)Operating profit ratio: increased by 0.8 points YoY.
21
Had record high net sales and operating profit for three consecutive quarters
Changes in Consolidated Financial Results - Quarterly
3Q of FY 2020(Three months)
1,731 2,100 2,167
2,472 2,598 2,580 2,706
0
1,000
2,000
3,000
1QFY2019
2Q 3Q 4Q 1QFY2020
2Q 3Q
Net sales
21
128 134 166 171
137 134 1.3%
6.1% 6.2% 6.7% 6.6%5.3% 5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
050
100150200250300350400450500
1QFY2019
2Q 3Q 4Q 1QFY2020
2Q 3Q
Operating profit / operating profit ratio
Second-hand online and media business contributed to increased revenue in 3Q.However, operating profit dropped due to the slump in acquisition of new broadbandlines in Jan-Feb.
Net sales
Operating profit
Increased by 24.9% YoY
Declined by 0.6% YoY
(unit: millions of yen) (unit: millions of yen)
22
Consolidated Income Statement
(unit: millions of yen) 3Q 2019Nine months
3Q 2020Nine months Pct. change
Net sales 5,999 7,885 +31.4%
Gross profit 2,433 3,019 +24.1%
Operating profit 285 443 +55.2%
(Operating profit ratio) 4.8% 5.6% -
Ordinary profit 283 443 +56.3%
Profit attributable to owners of parent 135 246 +81.9%
23
Changes in Results by Segment
*Net sales for 3Q of FY ending Jun 2019 are for reference purposes only, as the company began managing multiple segments in FY ending Jun 2020.
Disclosures for 3 segments starting this period2 new businesses moving forward smoothly
(unit: millions of yen)FY ending Jun 2019
3Q cumulative(reference)
FY ending Jun 20203Q cumulative Pct. change
Net sales 5,999 7,885 +31.4%
Second-hand online business 4,629 5,229 +13.0%
Media business 99 429 4.3xMobile & telecommunications business 1,346 2,430 1.8x
Adjustment (74) (203) -
24
1. Social Issues around us and Growth Strategy
2. FY2020 3Q Financial Results
3. Summary of Businesses by Segment・ Second-hand online business・ Media business・ Mobile & telecommunications business
4. Earnings Forecast for FY 2020
Contents
25
Second-Hand Online Business - Performance
1,698 1,755 1,775
0
1,000
2,000
1Q FY2020 2Q 3Q
Net sales
166 172 193
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
050
100150200250300350400450500
1Q FY2020 2Q 3Q
Segment profit
3Q of FY 2020(Three months)
Solid performance in third quarter. In April, the State of Emergency Declaration resulted in shorter business hours at purchase sites, which in turn led to a drop in in-store and door-to-door purchases, but an increase in home delivery purchases.
Net sales
Segment profit
Increased by 1.1% QoQ
(unit: millions of yen)
Increased by 11.7% QoQSegment profit ratio: improved by 1.1 points from 9.8% to 10.9%.
26*Figures for net sales and segment profit before adjustment for amount recorded in quarterly consolidated statements of income.
Second-Hand Online Business - Net Sales Ratio by Product
Net sales trendsby product
In main categories, home appliances and cameras saw losses, while musical instruments, audio, and PCs made gains. agricultural equipment, which we are focusing on as a strategic field, is progressing steadily.
・For other fields, hobby items including model train grew.
3Q
2Q
1Q FY2020 1,698 million yen
1,755 million yen
1,775 million yen
18%
18%
19%
12%
14%
13%
12%
11%
10%
13%
13%
13%
11%
10%
10%
10%
11%
11%
22%
22%
23%
1%
1%
2%
Home appliances Audio Cameras Mus. Instr. PCs
agriculturalequipment,
etc. Other
Brand goods and Luxury watches
5 Main Categories 27
(-9.8% comp. prev. yr.) (+5.0%) (-9.5%) (16.4%) (+37.3%) (+61.5%)
(-10.5%)
(+15.5%)
Second-Hand Online Business - Product Inventory & Inventory Turnover
Inventory turnover
stayed high
Product inventory for the end of 3Q held at a healthy level despite a decline from the previous quarter.・Q3 inventory declined from previous quarter due to seasonality, but inventory balance still held high at 340 mil. yen・Inventory turnover stayed high at 16.3 days
We are reducing inventory risk through rigorous inventory evaluation and focusing on selling fresh products
291 312 291
367 398
373 340
0
500
1QFY2019
2Q 3Q 4Q 1QFY2020
2Q 3Q
Inventory
8.8
12.9
17.215.4 16.3
0.0
10.0
20.0
FY2017 FY2018 FY2019 1H FY2020 3Q FY2020
Inventory turnover(unit: millions of yen)
(unit: times)
28
Topic: Internet Survey on Purchasing Services
Ranked No. 1 Recommended Service in seven categories of purchasing service survey!(1) No. 1 recommended purchasing service selected by flea market app users
(2) No. 1 recommended purchasing service selected by auction site users
(3) No. 1 recommended purchasing service selected by purchasing service users
(4) No. 1 recommended purchasing service selected by audio enthusiasts
(5) No. 1 recommended purchasing service selected by camera enthusiasts
(6) No. 1 recommended purchasing service selected by model train enthusiasts
(7) No. 1 recommended purchasing service selected by musical instrument enthusiasts
*Survey by Shopper's Eye, a site comparison image survey of 10 appliance purchase service companies29
Media Business - Performance
54 69 101
86 52
64
0
100
200
1Q FY2020 2Q 3Q
101
75
108
0
100
200
1Q FY2020 2Q 3Q
Segment profit
3Q of FY 2020(Three months)
PV increased mainly in telecommunications and entertainment areas due to stay-home consumption. Sales increased due to more advertising from outside customers resulting from increased media exposure. (See page 15 for PV trends)
Net sales
Segment profit
Increased by 35.7% QoQ
(unit: millions of yen)(unit: millions of yen)
Net sales from ME group
Net sales from outside customers
Net sales
Increased by 43.4% QoQ
30
141121
165
*Figures for net sales and segment profit before adjustment for amount recorded in quarterly consolidated statements of income.
Mobile & Telecommunications Business - Performance
844 755
829
0
1,000
1Q FY2020 2Q 3Q
Net sales
83
55 48
0
100
1Q FY2020 2Q 3Q
Segment profit
3Q of FY 2020(Three months)
Sales increased on the back of higher line revenues due to an increase in the number of customers owned. Profit dropped due to slump in acquisition of new lines in Jan-Feb.However, profits rose in April (see page 19).Net sales
Segment profit
Increased by 9.8% QoQ
(unit: millions of yen)
Declined by 13.5% QoQ
*Figures for net sales and segment profit before adjustment for amount recorded in quarterly consolidated statements of income.31
(unit: millions of yen)
Establishment of MarketEnterprise Vietnam, Our Offshore Development Site
As the digital shift accelerates, we are actively recruiting IT engineers at overseas sites to strengthen our systems development organization.
New Subsidiary MARKETENTERPRISE VIETNAM CO., LTD.
RepresentativeKohei Maruo, General Director(Director & CTO at MarketEnterprise Co., Ltd.)
Location Vietnam
Business Description
System development pertaining to the group businesses
Capital $500,000 (USD)
Shareholder Composition MarketEnterprise, 100%
1. Social Issues around us and Growth Strategy
2. FY2020 3Q Financial Results
3. Summary of Businesses by Segment・ Second-hand online business・ Media business・ Mobile & telecommunications business
4. Earnings Forecast for FY 2020
Contents
33
Earnings Forecast for FY 2020
Earnings forecasts remain as-is considering the uncertain economic environment, such as the impact of COVID-19.
(unit: millions of yen)
3Q of FY2020(Cumulative)
FY2020 full year(Forecast)
Amount Progress rateAmount YoY Change
Net sales 7,885 +31.4% 10,000 78.9%
Operating profit 443 +55.2% 600 73.9%
Ordinary profit 443 +56.3% 602 73.7%
Profit attributable to owners of parent 246 +81.9% 270 91.4%
34
For IR-Related Inquiries
The information contained in this document is for informational purposes only, and is not intended as a solicitation for investment. Statements of future predictions contained herein are based on judgments, assumptions, and beliefs in light of the information available to us at the time of the release of this document, and are subject to a number of risks and uncertainties, including, but not limited to, future domestic and international economic conditions, changes in the status of domestic and international business operations, or uncertain factors and potential risks inherent in such forecasts. Please note that actual performance may differ significantly from these forecasts due to a variety of factors, including economic conditions, market conditions, and more.
[email protected] address:
IR website:https://www.marketenterprise.co.jp/ir/index.html
Contact us at the following email address for IR-related questions, requests for meetings, etc.
35
Reference: Impact of and Response to Spread of Novel Coronavirus
Second-Hand Online Business
Reduced business hours: 10:30 - 16:00(normally 10:00 - 19:00)
・Implemented shortened hours at 10 locations nationwide (Effective period: April 8 - TBD)*We plan to resume normal operations once the State of Emergency declaration has been lifted.
・Door-to-door purchases only available when items can be picked up at doorstep.
・Contact center is basically operating normally through telecommuting (9:19 - 21:00)
・Operations and business basically continuing as normal through telecommuting
Media BusinessMobile & Telecommunications Business
Operating as normal
Continuing operations while ensuring the safety of our customers and employees
36
Reference: Positioning of Group Companies
MEmobile Co., Ltd.Shareholder Composition
65%Telecommunications service, such as WiMAX, discount SIM cards, etc.
ME Trading Co., Ltd.Shareholder Composition
100%
Operates FARM MART, membership-based overseas sales site for used agricultural equipment; agriculturalequipment trading company
UMM Co., Ltd.Shareholder Composition
100%
Operates one of Japan’s largest specialized marketplaces for agricultural equipment
MARKETENTERPRISE VIETNAM CO., LTD.
Shareholder Composition
100%
Offshore base for developing IT system infrastructure pertaining to all Group businesses
Second-hand online business
Mobile & telecommunications business
Second-hand online business/media business
37