總覽 > 個股

TOKAI Holdings Corporation (JP-3167) Tokyo Stock Exchange First Section ( I )

2019-01-09  提供機構:FISCO  作者:FISCO  點閱次數:2

twitter plurk facebook
字體

◆Summary

Record-high profits expected in FY3/19 based on growth in the number of Group customers and steady progress with M&A strategy

Based in Shizuoka Prefecture, Japan, TOKAI Holdings Corporation <3167> (hereinafter, “Tokai Holdings” or “the Company”) is expanding its two main businesses, “energy and lifestyle-related services,” primarily the provision of liquefied petroleum gas (LP gas), and “information and communications services.” The Company aims to become a “Total Life Concierge*” (TLC), a company offering a complete range of services for everyday life. In its medium-term management plan, “Innovation Plan 2020 ‘JUMP’” (hereafter, “IP20”), which started in FY3/18, the Company intends to actively invest in M&A and alliances to realize high growth.

* The Total Life Concierge concept indicates the Company’s aim to provide every type of lifestyle support service under a one contract, one stop, and one call-center model. While deepening its connection with customers, their local communities, society, and the global environment, the Company aims to enrich people’s lives, assist in the development of local communities, and contribute to protecting the global environment.

1. FY3/19 1H results

Looking at consolidated results for FY3/19 1H (April to September 2018), net sales increased 4.6% year on year (YoY) to ¥88,840mn and operating profit rose 11.6% to ¥3,475mn. The Company delivered record-high net sales for a six-month period. This result was due partly to the effects of M&As implemented in the previous fiscal year, as well as a steady increase in the number of Group customers to 2,893,000 as of the end of FY3/19 1H, up 66,000 from the end of FY3/18 1H. Profits decreased in the LP gas business due to an increase in purchase costs and a decline in sales volume to households. However, this decrease was covered by increases in profits in other business segments, primarily the CATV business. Consequently, the Company posted double-digit growth in operating profit. Operating profit in the LP gas business was ¥400mn below the initial forecast, but this shortfall was partly offset by higher-than-forecast profits in the CATV, information and communications services, and Aqua businesses. As a result, operating profit was only about ¥200mn below forecast.

2. FY3/19 earnings outlook

Looking at the outlook for consolidated results for FY3/19, the Company has left its initial forecasts unchanged, with net sales forecast to increase 5.1% YoY to ¥195,600mn, and operating profit to increase 27.2% to ¥13,960mn. Net sales and operating profit are both expected to reach record highs. In FY3/19 2H, profitability is expected to improve as higher prices of LP gas for homes penetrate the market. With sales and profits in the CATV and information and communications services businesses expected to continue growing, the Company remains on track to achieving its forecasts. The number of Group customers is projected to increase by 48,000 from the end of FY3/19 1H to 2,941,000 at the end of FY3/19, as the Company advances M&As and other initiatives.

3. Medium-term management plan (IP20)

In the medium-term management plan (IP20), the Company is targeting net sales of ¥339.3bn and operating profit of ¥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 grow 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 is currently in negotiations with target companies.

* Contract rate for multiple services = (total number of service contracts ÷ number of customers) -1

4. Strategy for the CATV business

In the CATV industry, the J:COM (Jupiter Telecommunications Co., Ltd.) Group holds a market share of just over 50% based on the number of subscribing households. The second-largest CATV company and smaller players have market shares in the single digits and are locked in a tight race for market share. Going forward, the largest companies are expected to swallow up the smaller players. Notably, the Company plans to actively advance M&As as a lifestyle infrastructure services company with strengths in providing a wide range of services such as LP gas and Internet services. These and other trends will be closely watched going forward.

5. 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 the total investment yield per share unit from the current share price level (closing price of ¥947 on November 13, 2018), 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

◆Business overview

Embraced “Total Life Concierge” as a management vision for providing 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 a complete 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 is striving to enrich people’s lives and to contribute to the development of local communities and to the conservation of 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, the information and communications services business, the CATV business, the building and real estate business, the Aqua business, and other businesses. Looking at the sales structure by segment in FY3/18, the Company’s original business, the gas and petroleum business accounted for 40.9% of sales, the information and communications services business for 27.4%, and the CATV business for 15.3%. These three mainstay businesses accounted for over 80% of sales. The details by business segment are as follows.

1. Gas and petroleum business

In this business, approximately 85% of net sales are provided by the LP gas business and around 15% by the city gas business. The mainstay LP gas business is developed by TOKAI Corporation, primarily for homes and businesses. The service areas are mainly in the Shizuoka and Kanto regions, but since 2015 it has also actively expanded into other areas including the south Tohoku, Chubu/Tokai, Chugoku, and Kyushu areas and has been focusing on increasing customer numbers. As of the end of September 2018, it had 615,000 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 around 20%, 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 areas and conducting M&A.

In the city gas business, TOKAI GAS CORPORATION supplies city gas in Yaizu City, Fujieda City, and Shimada City in Shizuoka Prefecture. As the service area is limited, the number of contracts, which was 55,000 at the end of September 2018, remains basically constant. 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, the Company plans to expand its customer base by bringing regional operators on board as Group companies through M&A deals. As the first stage of this, it announced that it will acquire the gas business of Shimonita Town in Gunma Prefecture* 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 in FY3/18, the consumer business contributed 62% and the corporate business 38%.

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 September 2018, the Company had 440,000 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 768,000 customers. This number has steadily declined from 863,000 as of the end of March 2015, immediately after the Hikari Collaboration service was launched. This decline has occurred because customers have been leaving the service at a faster pace than new customers can be 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.

The mobile business operates 12 mobile phone stores, mainly within Shizuoka Prefecture, as a sales agency of Softbank Corp <9434>, and as of the end of September 2018, it had 223,000 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 the Company began sales of LIBMO, which is a low-cost smartphone service, as an MVNO business*. The number of LIBMO customers had steadily increased to 36,000 at the end of September 2018.

* MVNO (Mobile Virtual Network Operator): Operators who provide services by borrowing other companies’ wireless communication infrastructure, such as for mobile phones.

3. CATV business

In the CATV business, the Company provides broadcasting and communications services (Internet access services) in Tokyo and five prefectures: Shizuoka, Kanagawa, Chiba, Nagano and Okayama. Currently, the CATV business is undertaken by nine Group companies. As of September 30, 2018, the number of customers stood at 781,000 for broadcasting services and 265,000 for communications services, bringing the total to 1,046,000 customers. In terms of the market share of CATV viewing households, the Company 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 business

In this business, TOKAI Corporation engages in the construction and design of detached housing, multi-dwelling housing, stores, and office buildings. It also provides a building management service, sells home facilities and equipment, 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

This 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 spring water at two factories in Shizuoka Prefecture that have a total production capacity of approximately 180,000 cus­tomers. The Company had 156,000 customers at the end of September 2018. The overall industry had 3,700,000 customers as of the end of 2017, 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 September 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.

◆Results trends

Achieved double-digit profit growth as the decrease in profits in the LP gas business was outweighed by increases in profits in other business segments

1. Overview of the FY3/19 1H results

Looking at consolidated results for FY3/19 1H, the Company posted higher sales and profit YoY. Net sales increased 4.6% YoY to ¥88,840mn, operating profit rose 11.6% to ¥3,475mn, recurring profit increased 13.9% to ¥3,580mn, and net income attributable to owners of the parent increased 39.3% to ¥1,736mn. The Company delivered record-high net sales for a six-month period, due partly to the effects of M&As implemented in FY3/18, as well as a steady increase in the number of Group customers, primarily in the LP gas and CATV businesses. Looking at the main factors behind changes in operating profit, there was a negative impact of ¥900mn from the gas business due to the impact of high temperatures and an increase in purchase prices. However, this drop in profits in the gas business was outweighed by a positive impact of ¥1,100mn primarily from monthly fee revenue due to an increase in the number of customers and a positive impact of ¥100mn due to a reduction in sales promotion costs for LIBMO, the Company’s low-cost smartphone service.

The number of Group customers was 2,893,000 as of the end of FY3/19 1H, an increase of 17,000 from the end of FY3/18. The net increase in the number of Group customers was 13,000 YoY. In terms of the percentage rate of increase, the number of Group customers rose sharply by 34.9% on a net basis. Notably, the number of Group customers increased significantly in the LP gas and CATV businesses, where the Company is expanding its sales areas. (There were increases of 9,000 customers in the LP gas business and 14,000 customers in the CATV business.)

Net sales and operating profit were 1.4% and 6.1% below the Company’s initial forecasts, respectively. The shortfall in operating profit mainly reflected lower-than-expected profits in the LP gas business, mainly because of low­er-than-anticipated sales volume of LP gas for homes due to high temperatures and the rise in purchasing prices alongside high crude oil prices. Operating profit in the CATV, information and communications services, and Aqua businesses surpassed the Company’s forecasts.

The CATV and Aqua businesses performed strongly, with double-digit increases in sales

2. Trends by business segment

(1) Gas and petroleum business

In the gas and petroleum business, net sales increased 3.6% YoY to ¥33,948mn while operating profit decreased 30.6% YoY to ¥1,084mn. Within this business, net sales in the LP gas business increased 2.9% YoY to ¥28,262mn, partly because the number of customers increased by 22,000 from the end of FY18/3 1H to 615,000 as of the end of FY19/3 1H, and the higher prices of raw materials pushed up sales prices. In the past few years, the Company has been strategically expanding its sales areas. In June 2018, the Company opened the Kyushu Office (Fukuoka Prefecture), thereby expanding its sales areas to Tokyo and 13 prefectures. The number of customers has increased by 9,000 on a net basis since the end of FY3/18. This figure breaks down into a net increase of 5,000 in new sales areas (Kitakanto, Minamitohoku, Aichi Prefecture, Gifu Prefecture, Okayama Prefecture, Fukuoka Prefecture) (including 1,500 in Fukuoka) and a net increase of 4,000 in existing sales areas (Shizuoka Prefecture, the Tokyo Metropolitan Area, and other areas), reflecting steady growth in each area. The Company has offered discounts to customers signing up for multiple contracts for other services within the Group, and has continuously taken steps to prevent contract cancellations in existing sales areas. These initiatives have proven highly effective in increasing the number of customers.

Meanwhile, in the city gas business, net sales rose 7.3% YoY to ¥5,686mn, 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 reasons for the decline in operating profit were a decrease in sales volume per home LP gas customer due to the aforementioned higher-than-normal temperatures and a rise in purchasing prices of raw materials in connection with high crude oil prices. Generally, it is said that when the temperature is 1°C higher, the volume of gas consumed by homes decreases by 3%. The average temperature in FY3/19 1H was 1.4°C higher than in FY3/18 1H and it seems that the sales volume per customer decreased by around 4%.

(2) Information and communications services business

In this business, net sales increased 1.0% YoY to ¥25,154mn, while operating profit increased 4.3% to ¥1,608mn. Within these amounts, net sales in the consumer business suffered a downturn, decreasing 1.3% to ¥15,504mn. Although the number of customers for Hikari Collaboration, which has high monthly revenue, increased by 13,000 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 52,000 to 440,000 due to the intensification of competition with major mobile carriers. The Company has been competing with the major mobile carriers. In this environment, the Company has sought to stop the downward trend by creating a sense of better affordability through service bundle sales with LIBMO, its low-cost smartphone service, since FY3/17, but it continues to face an uphill battle on this front. The number of LIBMO customers increased by 23,000 on the end of the same period in the previous fiscal year to 36,000.

Conversely, the corporate business performed steadily, with net sales increasing 4.9% YoY ¥9,649mn. Sales of data communication services trended firmly against the backdrop of the expansion of the cloud services market, and also sales increased for outsourced systems development.

Operating profit in the corporate business decreased by approximately ¥40mn YoY due to the impact of price hikes in access service fees from NTT. However, operating profit in the consumer business rose by approximately ¥100mn due to the effects of reductions in sales promotion costs for LIBMO.

(3) CATV business

In the CATV business, net sales increased 11.2% YoY to ¥15,135mn and operating profit rose 31.7% YoY to ¥2,330mn, marking a strong performance trend. The Company converted Tokyo Bay Network Co., Ltd. and TV Tsuyama Inc. into subsidiaries in FY3/18 2Q and FY3/18 4Q, respectively. These M&A deals had the positive effect of increasing both sales and profit, lifting net sales by ¥1,000mn and operating profit by nearly ¥100mn. The number of customers increased steadily in both broadcasting and communications services. The number of customers increased by 33,000 YoY to 781,000 for broadcasting services and 18,000 YoY to 265,000 for com­munications services. The Company undertook sales initiatives such as providing discount services to customers signing up for both broadcasting and communications services and offering smartphone bundles at discounted prices through tie-ups with major mobile phone carriers, as well as steps to prevent contract cancellations. These initiatives led to an increase in the number of customers.

The operating profit margin rose from 13.0% YoY to 15.4%. The main factors behind this were the rise in the ratio of broadcasting and communications service bundle contracts in the existing areas, which resulted in the increase in earnings per customer, and the ongoing decrease in depreciation and goodwill amortization costs.

(4) Building and real estate business

In the building and real estate business, net sales increased 7.6% YoY to ¥8,987mn and operating profit rose 42.8% to ¥554mn. The higher sales were due to the increase in projects for the renovation business and for building work. In particular, in the renovation business, the effects of strengthening the sales structure in the Shizuoka area are being realized. Most of the rise in operating profit was provided by the increase in sales in the renovation business.

(5) Aqua business

In this business, net sales increased 14.2% YoY to ¥3,490mn, while operating profit increased 115.6% to ¥291mn, marking the first increase in operating profit in two fiscal years. The Company worked actively to acquire custom­ers, including those at large-scale commercial facilities, and the customer numbers had increased by 15,000, over 10% YoY, on the end of the same period in the previous fiscal year to 156,000 customers, which was the main reason for the higher sales and profits.

(6) Other businesses and adjustments

In the other businesses, net sales decreased 4.1% YoY to ¥2,123mn. Breaking this down, in the nursing care business, sales increased 5.2% to ¥532mn 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 and net sales fell 7.1% YoY to ¥624mn, while in the shipbuilding business, the volume of ship repair work fell and net sales decreased 8.6% to ¥627mn and operating profit also declined. This segment’s operating loss, including internal adjustments, was ¥2,393mn (a loss of ¥2,282mn in the same period in the previous fiscal year).

3. Financial position

Looking at the financial condition at the end of FY3/19 1H, total assets were down ¥1,073mn on the end of the previous fiscal year to ¥164,920mn. This decrease was primarily attributable to a decrease of ¥2,403mn in notes and accounts receivable-trade owing to seasonal factors, offsetting an increase of ¥729mn in “Others” in current assets, stemming from an increase in derivative valuation assets.

Total liabilities were ¥102,493mn, down ¥2,049mn from the end of the previous fiscal year. The decline was mainly attributable to a decrease of ¥2,295mn in notes and accounts payable-trade owing to seasonal factors and a decrease of ¥3,271mn in “Others” in current liabilities due to capital expenditure-related payments, offsetting an increase of ¥3,950mn in interest-bearing debt.

Total net assets rose ¥976mn from the end of the previous fiscal year to ¥62,426mn. The increase was mainly attributable to the recording of net income attributable to owners of the parent of ¥1,736mn and an increase of ¥1,106mn in deferred gains on hedges. These factors were partly offset by dividend payments of ¥1,839mn.

The equity ratio, which indicates financial soundness, stood at 37.1%, as a result of steadily rising in the past few years. 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.

 

報告內容僅供參考,不得作為任何投資引用之唯一依據,且其投資風險及決定應由投資人自行判斷並自負損益。

TOP

【免責聲明】 本研究報告專區中的資訊均來自於各金融機構授權刊登或是已公開的資訊,鉅亨網對資訊的準確性、完整性和及時性不作任何保證,也不保證上述資訊報告做出的建議在未來不發生修正。在任何情況下,鉅亨網不對本資訊的使用人基於本資訊報告觀點進行的投資所引致的任何損益承擔任何責任。本網研究報告版權均歸各家提供機構所有,不得任意引用、刊發,且不得對原文進行修改或刪除。以上資訊僅供參考。

最近訪問研報

研報點閱排行

雜誌文章點閱排行