Asia Pacific Equity Research
25 January 2018
Equity Ratings and Price Targets
Mkt Cap Rating Price Target
Company Ticker (¥ bn) Price (¥) Cur Prev Cur Prev
(2371) 2371 JT 1,915 N n/c 1,800 1,600
Gurunavi (2440) 2440 JT 1,380 N n/c 1,400 1,700
Source: Bloomberg, . Morgan estimates. n/c = no prices as of 24 Jan 18.
Internet Sector
Online Reservations the Key for Restaurant
Information Sites, but Still Early Stage, Too Soon for
Optimism or Pessimism
Japan Equity Research
Internet, Games, Media
Haruka Mori
AC
(81-3) 6736-8632
@
Bloomberg JPMA MORI <GO>
Ying Tan
(81-3) 6736-8638
@
JPMorgan Securities Japan Co., Ltd.
See page 40 for analyst certification and important disclosures, including non-US analyst disclosures.
. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
Online reservations have started penetrating the restaurant market, but as they
still account for less than 10% of overall reservations, uptake remains at an initial
stage. Earnings at service companies seem to be significantly affected by online
reservation initiatives, but we think penetration upside could be limited unless
restaurant-side bottlenecks in terms of reservation management are eliminated.
This report looks at restaurant market trends and considers the strategies and
outlook at companies that are changing their approaches.
and Gurunavi earnings updates: We revise our estimates for
both and Gurunavi on recent company contact and other factors.
We also raise our price target for from ¥1,600 to ¥1,800 and lower
our target for Gurunavi from ¥1,700 to ¥. We think short-term actions are
difficult at both companies, but our medium-term views are as follows.
: We believe it will be hard to maintain online reservation
momentum without eliminating industry bottlenecks from inventory shortages.
We also do not think the shares look undervalued. Gurunavi: We expect risk of
a profit decline in FY2018 to weigh on the shares, but think the potential for
business support services to create a major change in course merits attention.
Restaurant market is firm, but labor shortages severe; reviews of sales
promotion budgets to continue: Judging from industry data and the Family
Income and Expenditure Survey, restaurant market trends look reasonably good,
and we also see positives from signs of a recovery for long-slumping izakaya
chains (Japanese-style pubs) and growth in inbound spending. However,
momentum is slowing based on the number of restaurants, even at strong-
performing dinner restaurants, perhaps affected by labor shortages. Moreover,
business conditions are noticeably weak at major listed restaurant companies,
and we expect reviews of sales promotion budgets to continue.
Current earnings could be affected by online reservation initiatives: Online
initiatives seem to have a large impact on earnings at each company, .,
slowdown for Gurunavi, momentum recovery for Tabelog, and stable trends for
Hot Pepper Gourmet. We are especially interested in differing trends for
Gurunavi and Hot Pepper Gourmet, which have relatively similar client
segments and business models. At present, we believe this stems from
restaurants being more likely to yield sales promotion benefits from Hot Pepper
Gourmet, given its much higher number of online customer referrals.
Reservation management could be key to business support services: We
think full penetration of online reservations requires the databasing of
reservation management, which many restaurants still do on paper, and future
linkage to inventory. Reservation books are a key factor, and Recruit’s
Completed 25 Jan 2018 01:05 AM JST
Disseminated 25 Jan 2018 01:13 AM JST
2
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Restaurant Board is advancing mainly among its clients, while Toreta has a
large presence especially at popular restaurants. Additionally, Gurunavi has
decided to use Toreta as its reservation book system, and we focus on whether it
catches up going forward. Reservation management involves customer
management in addition to seat management, and we believe the spread of
reservation books will play an important role in efforts to expand business
support services.
3
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Restaurant market trends
Demand already solid, inbound spending also rising
Long-struggling izakaya chains recover to generally year-ago levels
There are a variety of data on restaurant spending, but none show signs that business
conditions in the restaurant market are deteriorating, and figures published by the
Japan Food Service Association and Recruit’s Hot Pepper Gourmet Research Center
show that trends are improving at long-struggling izakaya chains. Additionally, the
Ministry of Internal Affairs and Communications’ (MIC) monthly data on restaurant
spending shows that trends deteriorated from mid-2016, but have recovered
gradually since spring 2017 (Figure 1).
The Japan Food Service Association uses the following business categories with
reference to commercial statistics published by the Ministry of Economy, Trade and
Industry (METI). (1) Fast food: eat in or take out, mainly food, moderately low sales
per customer, some self-service. (2) Family restaurants: mainly eat in, mainly food,
mid-level sales per customer, relatively high number of seats. 3) Pubs and izakaya:
mainly eat in, food and alcoholic beverages, moderately high sales per customer,
high weighting of alcoholic beverages. 4) Dinner restaurants: mainly eat in, mainly
food, high sales per customer.
Figure 1: Dining Market Revenue YoY Trend
Source: Japan food service data, . Morgan
Figure 2: Rev and Growth rate Trend for Dining Market and Pubs
¥ billion
Source: Hot Pepper,
Figure 3: Household Dining Expense (Monthly)(>=2 family members)
¥
Source: MIC, . Morgan
%
%
%
%
%
09
/2
09
/5
09
/8
09
/1
1
10
/2
10
/5
10
/8
10
/1
1
11
/2
11
/5
11
/8
11
/1
1
12
/2
12
/5
12
/8
12
/1
1
13
/2
13
/5
13
/8
13
/1
1
14
/2
14
/5
14
/8
14
/1
1
15
/2
15
/5
15
/8
15
/1
1
16
/2
16
/5
16
/8
16
/1
1
17
/2
17
/5
17
/8
17
/1
1
Total Pub/Izakaya
Fast food Family restaurants
Restaurant for dinner
-10%
-5%
0%
5%
10%
15%
0
100
200
300
400
500
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
2016 2017
Total(excl. Izakaya etc) Izakaya, bar, etc
Total YoY(RHS) Izakaya, bar, etc YoY(RHS)
%
%
%
%
%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Ja
n
M
a
r
M
a
y
Ju
l
S
e
p
N
o
v
Ja
n
M
a
r
M
a
y
Ju
l
S
e
p
N
o
v
Ja
n
M
a
r
M
a
y
Ju
l
S
e
p
N
o
v
2015 2016 2017
eating out expense YoY (RHS)
4
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Spending by foreign tourists in Japan supports market growth
Total spending by foreign tourists in Japan grew 18% YoY to ¥ trillion in 2017. A
breakdown puts lodging at ¥ trillion (+23% YoY), shopping at ¥ trillion
(+15%), and dining at ¥886 billion (+17%). The ratio to the overall restaurant market
(c.¥ trillion in 2016, according to the Foodservice Industry Research Institute) has
been expanding gradually.
Gurunavi is expanding foreign language services to capture inbound demand
(contracting restaurants can use its basic plan free of charge and pay for additional
options), and the number of restaurants with detailed menus supporting seven
languages surpassed 26,000 in October. It seems to be becoming the default for
foreign language services, and has announced cooperation in advance reservation
services first with China’s Ctrip and recently Meituan-Dianping (which operates the
review website Dianping and the group coupon website Meituan) in December.
Figure 4: Foreign Visitors’ Annual Consumption Expense in Japan
¥ billion
Source: JNTO, . Morgan
Figure 5: Foreign Visitors’ Quarterly Meal Expense in Japan
¥ billion
Source: JNTO, . Morgan
Figure 6: # of Foreign Visitors and Average Expense(Yearly)
Mn ppl, ¥
Source: JNTO, . Morgan
Figure 7: # of Foreign Visitors and Average Expense (Quarterly)
Mn ppl, ¥
Source: JNTO, . Morgan
-20%
0%
20%
40%
60%
80%
-
1,000
2,000
3,000
4,000
5,000
2012 2013 2014 2015 2016 2017
Meals Shopping
Hotel Others
Meals YoY(RHS) Total YoY(RHS)
Hotel YoY(RHS) Shopping YoY(RHS)
Others YoY(RHS)
0%
10%
20%
30%
40%
50%
60%
-
50
100
150
200
250
300
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
2014 2015 2016 2017
Meals expense Meals expense YoY(RHS)
-
50,000
100,000
150,000
200,000
-
5
10
15
20
25
30
35
2012 2013 2014 2015 2016 2017
# of Foreign visitors(mn)
Avg consumption expense per person(JPY)
0
50,000
100,000
150,000
200,000
-
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
Ja
n
-M
a
r
A
p
r-
Ju
n
Ju
l-
S
e
p
O
ct
-D
e
c
2014 2015 2016 2017
# of Foreign visitors(mn)
Avg consumption expense per person(JPY)
5
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Impact of labor shortages becoming noticeable, conditions
difficult
No prospects for resolving labor shortages; personnel and hiring costs could
weigh
The ratio of job openings to applicants for customer service and wait staff positions
has recently reached , indicating that tight supply/demand in the labor market is
becoming a more severe problem in the restaurant industry. We believe this problem
is exacerbated by heavy hiring costs in addition to rising wages, and by higher
personnel turnover than in other industries. As a result, more restaurants are
responding to labor shortages by revising store opening plans, setting fixed holidays,
and shortening opening hours. Given few prospects for resolving labor shortages,
restaurants urgently need to use technology to enhance operational efficiency.
However, the restaurant industry has had virtually no data accumulation because
reservation management, ordering, and other operations are still done mainly on
paper. Given the potential to bring about major innovation, we think labor shortages
are not solely a negative factor.
Figure 8: Job Offers to Applicants Ratio(Customer Service)
X
Source：Ministry of Health, Labour and Welfare, . Morgan
Figure 9: Part-time Hourly Wage for Food-related Jobs in the Major 3
Metropolitan Areas
¥
Source：Recruit Jobs Research Center, . Morgan
Figure 10: Turnover Ratio Trend (Hotels, Restaurants, and Total)
Source：Ministry of Health, Labour and Welfare, . Morgan
Figure 11:Turnover Ratio by Industry (2016)
Source：Ministry of Health, Labour and Welfare, . Morgan
M
ar
-1
2
Ju
l-1
2
N
o
v-
1
2
M
ar
-1
3
Ju
l-1
3
N
o
v-
1
3
M
ar
-1
4
Ju
l-1
4
N
o
v-
1
4
M
ar
-1
5
Ju
l-1
5
N
o
v-
1
5
M
ar
-1
6
Ju
l-1
6
N
o
v-
1
6
M
ar
-1
7
Ju
l-1
7
N
o
v-
1
7
Job offers to applicants ratio
Job offers to applicants ratio_customer service
%
%
%
%
%
%
%
900
920
940
960
980
1000
D
e
c
F
e
b
A
p
r
Ju
n
A
u
g
O
ct
D
e
c
F
e
b
A
p
r
Ju
n
A
u
g
O
ct
D
e
c
F
e
b
A
p
r
Ju
n
A
u
g
O
ct
D
e
c
2014 2015 2016 2017
Average hourly wage
30%
%
0%
5%
10%
15%
20%
25%
30%
35%
2010 2010 2011 2012 2013 2014 2015 2016
Hotels, Restaurants Total
0%
5%
10%
15%
20%
25%
30%
35%
H
o
te
ls
,
R
e
st
a
u
ra
n
ts
E
n
te
rt
a
in
m
e
nt
s
e
rv
ic
e
O
th
e
rs
R
e
a
l e
st
a
te
/R
e
n
ta
l
E
d
u
ca
tio
n
T
o
ta
l
W
h
o
le
sa
le
/R
e
ta
il
M
e
d
ic
a
l
C
o
n
su
m
p
tio
n
-r
e
la
te
d
T
ra
n
sp
o
rt
a
tio
n IT
M
a
n
u
fa
ct
u
re
s
M
in
in
g
M
a
ch
in
e
ry
C
o
n
st
ru
ct
io
n
F
in
a
n
ce
/I
n
su
ra
n
ce
M
a
te
ri
a
ls
M
u
lti
se
rv
ic
e
E
le
ct
ric
,
G
a
s,
H
e
a
t,…
6
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Number of izakaya continues to decline, dinner restaurants are also down year
on year
However, looking at store numbers, we see that izakaya chains continue a downward
trend, while dinner restaurants, which had been strong for some time, have had
slower growth since mid-2016 and recently announced monthly figures showing year
on year declines. The market environment is not bad, but we think companies may be
revising store opening plans as a result of labor shortages. Store numbers are holding
flat or declining at a majority of major listed restaurant companies that operate
izakaya and dinner restaurants (Figures 15–33).
Figure 12: Number of Restaurants in Dining Out Industry (YoY)
Source: Japan food service data, . Morgan
Major restaurant companies that operate izakaya and dinner restaurants are
facing challenges
Figures 14–33 show trends in earnings and store numbers at major restaurant
companies that mainly operate izakaya and dinner restaurants. Although some have
solid performances, majority of the companies are having a hard time. Colowide is
rehabilitating acquired company Kappa Create, same-store sales in the izakaya
business are still seemingly struggling to recover, and higher personnel costs are
pressuring profits. However, the company forecasts profits to improve in FY2017
due to curbs on CoGS and greater cost-effectiveness. Via Holdings and Dynac
revised down FY2017 operating profit guidance due to hiring difficulties and higher
personnel costs. AP Company’s earnings have continued to deteriorate since FY2014
due to lower same-store sales and higher costs from expanding the overseas
restaurant business. Meanwhile, Watami and Sanko Marketing Foods have improved
profits over the past few years mainly through substantial store reorganization and
exit from unprofitable stores. Additionally, while a majority of companies struggle,
DD Holdings has achieved strong earnings thanks to successful efforts to improve
existing stores and to profit contributions from cost cutting.
%
%
%
%
%
%
%
%
09
/2
09
/5
09
/8
0
9
/1
1
10
/2
10
/5
10
/8
1
0
/1
1
11
/2
11
/5
11
/8
1
1
/1
1
12
/2
12
/5
12
/8
1
2
/1
1
13
/2
13
/5
13
/8
1
3
/1
1
14
/2
14
/5
14
/8
1
4
/1
1
15
/2
15
/5
15
/8
1
5
/1
1
16
/2
16
/5
16
/8
1
6
/1
1
17
/2
17
/5
17
/8
1
7
/1
1
Total Pub/Izakaya
Fast food Family restaurants
Restaurant for dinner
7
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 13: Dining Service Companies and TOPIX Share Price Comparison (Normalized)
Source: Bloomberg, . Morgan
Figure 14: COLOWIDE: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 15: COLOWIDE: Number of Restaurants
restaurants
Source: Company data, . Morgan
40
60
80
100
120
140
TPX Colowide Watami Daisyo
Dynac VIA Sanko Marketing DD
apcompany Chimney
APCompany
Chimney
DD
APCompany
VIA
Daisyo
TPX
Colowide
Sanko
Dynac
Watami
0
2,000
4,000
6,000
8,000
10,000
0
50,000
100,000
150,000
200,000
250,000
300,000
3/063/073/083/093/103/113/123/133/143/153/153/163/17 1H
3/18
Revenue
OP (RHS)
Acquired
Kappa Create
0
200
400
600
800
1,000
1,200
1,400
1,600
0
6
/3
0
7
/3
0
8
/3
0
9
/3
1
0
/3
1
1
/3
1
2
/3
1
3
/3
1
4
/3
1
5
/3
1
6
/3
1
7
/3
1
H
1
8
/3
18
/3
C
oE
Number of restaurant
Acquired
Kappa Create
8
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 16: MONTEROZA: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 17: MONTEROZA: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 18: WATAMI: Restaurant Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 19: WATAMI: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 20: DAISYO: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 21: DAISYO: Number of Restaurants
restaurants
Source: Company data, . Morgan
-2,000
0
2,000
4,000
6,000
8,000
10,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17
Revenue OP (RHS)
0
500
1,000
1,500
2,000
2,500
14/3 15/3 16/3 17/3
Number of restaurant
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
0
20,000
40,000
60,000
80,000
100,000 Eating-out revenue
Eating-out OP (RHS)
0
100
200
300
400
500
600
700
Number of restaurant
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0
20,000
40,000
60,000
80,000
100,000
Revenue OP (RHS)
0
200
400
600
800
Number of restaurant
9
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 22: Chimney: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 23: Chimney: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 24: DYNAC: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 25: DYNAC: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 26: VIA Holdings: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 27: VIA Holdings: Number of Restaurants
restaurants
Source: Company data, . Morgan
0
1,000
2,000
3,000
4,000
5,000
0
20,000
40,000
60,000
Revenue
OP (RHS) FY changed
0
100
200
300
400
500
12/11 12/12 12/13 12/14 12/15 3/17 1H 3/18
Number of restaurant
0
200
400
600
800
1,000
1,200
1,400
1,600
0
10,000
20,000
30,000
40,000
Revenue
OP (RHS)
0
50
100
150
200
250
300
Number of restaurant
0
500
1,000
1,500
0
10,000
20,000
30,000
40,000
0
6
/3
0
7
/3
0
8
/3
0
9
/3
1
0
/3
1
1
/3
1
2
/3
1
3
/3
1
4
/3
1
5
/3
1
6
/3
1
7
/3
1
H
1
8
/3
1
8
/3
C
oE
(o
ld
)
1
8
/3
C
o
E
(n
e
w
)
Revenue
OP (RHS)
0
100
200
300
400
500
600
700
07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 1H
18/3
Number of restaurant
10
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 28: Diamond Dining: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 29: Diamond Dining: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 30: APCompany: Revenue & Operating Profit Trends
¥ million
Source: Company data, . Morgan
Figure 31: APCompany: Number of Restaurants
restaurants
Source: Company data, . Morgan
Figure 32: Sanko Marketing Foods: Revenue & Operating Profit
Trends
¥ million
Source: Company data, . Morgan
Figure 33: Sanko Marketing Foods: Number of Restaurants
restaurants
Source: Company data, . Morgan
0
500
1,000
1,500
2,000
2,500
0
10,000
20,000
30,000
40,000
50,000
2/
6
2/
7
2/
8
2/
9
2/
1
0
2/
1
1
2/
1
2
2/
1
3
2/
1
4
2/
1
5
2/
1
6
2/
1
7
3
Q
2
/1
8
2
/1
8C
o
E
(o
ld
)
2/
1
8
C
oE
(n
e
w
)
Restaurant revenue
Restaurant OP (RHS)
Acquisition of
Zetton
0
50
100
150
200
250
300
350
400
450
500
Number of restaurant
Acquisition of
Zetton
0
500
1,000
1,500
0
5,000
10,000
15,000
20,000
25,000
30,000 Revenue
OP (RHS)
0
50
100
150
200
250
13/3 14/3 15/3 16/3 17/3 1H 18/3 18/3CoE
Number of restaurant
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0
5,000
10,000
15,000
20,000
25,000
30,000 Revenue OP (RHS)
0
50
100
150
200
250
300
6/07 6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17
Number of restaurant
11
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Restaurant information site trends
Clear differences in earnings results
Marketing cost review of restaurants likely to continue
Originally large chain-based companies were the primary ones revising their store-
opening plans and focusing on costs more than before, owing to labor shortages, but
the trend has been affecting midsize companies also. We think these moves to revise
marketing costs will continue for a while given the difficulties of holding down labor
costs. Gurunavi and Hot Pepper Gourmet, which have generated much revenue per
restaurant, may tend to be targets of the changes. We think weaknesses in terms of
the ability to refer customers through online booking, the only way to visualize the
media impact, may have had an effect. Tabelog is unlikely to be affected because of
a low exposure to izakaya chains. The volume-based fees adopted by Tabelog last
year for online reservations have gotten off to a smooth start because the original flat
fees set by the company were low, and restaurants were willing to accept results-
based fees.
Figure 34: Quarterly Revenue Trend of Tabelog, Gurunavi, Hot Pepper
¥ million
Source: Company data, . Morgan estimate
Figure 35: Annual Revenue Trend of Tabelog, Gurunavi, Hot Pepper
¥ million
Source: Company data, . Morgan estimate
-10%
0%
10%
20%
30%
40%
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q 3Q 1Q 3Q 1Q 3Q 1Q
3Q
E
2Q 4Q 2Q 4Q 2Q 4Q 2Q
4Q
E
1Q 3Q 1Q 3Q 1Q 3Q 1Q
3Q
E
2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018
Hotpepper Tabelog Gurunavi
Revenue YoY(RHS)
-10%
0%
10%
20%
30%
40%
0
10,000
20,000
30,000
40,000
3/
13
3/
14
3/
15
3/
16
3/
17
3/
18
E
3/
19
E
3/
20
E
3/
13
3/
14
3/
15
3/
16
3/
17
3/
18
E
3/
19
E
3/
20
E
3/
13
3/
14
3/
15
3/
16
3/
17
3/
18
E
3/
19
E
3/
20
E
Hot Pepper Gourmet Tabelog Gurunavi
Revenue
YoY (RHS)
12
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
The three companies have about the same number of paying participating
restaurants, but differences in ARPUs are still large
Quarterly trends are unavailable because Recruit does not disclose detailed data on
Hot Pepper Gourmet. However, the unweighted average monthly ARPU is about
¥59,000, based on July-September revenue and roughly 50,000 paying participating
restaurants. The three companies have about the same number of paying participating
restaurants, but the differences in their fees are still large (July-September averages:
roughly ¥22,000 for Tabelog and ¥40,000 for Gurunavi).
We expect volume-based reservation fees to contribute to a rise in Tabelog's ARPU
(by ¥8,000-9,000 a month). We believe Gurunavi's ARPU is likely to continue to
decline until next fiscal year because its marketing support service has not been
doing well, but we expect the trend to recover gradually thanks to the business
support and foreign language services.
Figure 36:Trend of the # of Paid Member Restaurants of Tabelog and
Gurunavi (Quarterly)
‘000 restaurants
Source: Company data, . Morgan estimate
Figure 37:Trend of ARPU of Tabelog and Gurunavi (Quarterly)
¥
Source: Company data, . Morgan estimate
Figure 38:Trend of the # of Paid Member Restaurants of Tabelog and
Gurunavi (Yearly)
‘000 restaurants
Source: Company data, . Morgan estimate
Figure 39:Trend of ARPU of Tabelog and Gurunavi (Yearly)
¥
Source: Company data, . Morgan estimate
-10%
0%
10%
20%
30%
40%
50%
0
10
20
30
40
50
60
70
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
3Q
E
12/3 13/3 14/3 15/3 16/3 17/3 18/3
Gurunavi Tabelog
Gurunavi YoY (RHS) Tabelog YoY (RHS)
-10%
-5%
0%
5%
10%
15%
0
10,000
20,000
30,000
40,000
50,000
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
3Q
E
12/3 13/3 14/3 15/3 16/3 17/3 18/3
Gurunavi Tabelog
Gurunavi YoY (RHS) Tabelog YoY (RHS)
-10%
0%
10%
20%
30%
40%
0
10
20
30
40
50
60
70
12/3 13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E
Gurunavi Tabelog
Gurunavi YoY(RHS) Tabelog YoY(RHS)
-20%
0%
20%
40%
60%
0
10,000
20,000
30,000
40,000
50,000
12/3 13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E
Gurunavi Tabelog
Gurunavi YoY(RHS) Tabelog YoY(RHS)
13
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Differences in online reservation initiatives substantially
affect earnings
More than 90% of restaurant reservations are still managed on paper;
increasing availability a key factor
The restaurant industry has been slow to move to online reservations; probably fewer
than 10% of restaurants have done so so far, based on our checks (there are no
reliable data available). Although diners benefit considerably from online
reservations by being able to reserve tables any time of day, restaurants have not
been very enthusiastic because of the time and effort involved in managing online
bookings by phone and through various media. , Recruit and others have
grown rapidly in recent years by urging restaurants to increase the number of spots
available for online reservations. However, online booking has not become a reliable
tool for diners because they have had to end up calling to clear up overbookings and
make specific requests (for private rooms and menu changes, for example).
Hot Pepper currently the leader in terms of number of restaurants that can be
reserved immediately and number of immediate reservations
Hot Pepper Gourmet is well ahead of Tabelog and Gurunavi in terms of the number
of online reservations made. However, Hot Pepper Gourmet's and Gurunavi's actual
figures are probably somewhat lower because they do not take into account
cancellations. Hot Pepper Gourmet's number of reservations entirely reflects
immediate reservations, ones that are very convenient for diners, as they are
immediately confirmed online, but Tabelog's and Gurunavi's figures are much
different because they include provisional reservations (ones that need to be
confirmed by the restaurants). One reason is that Hot Pepper Gourmet is used mainly
by young adults, but also there is a large number of available spots for immediate
reservations. Hot Pepper Gourmet is well ahead of the other sites in terms of the
number of restaurants that can be booked online immediately (Figure 41-42).
Figure 40: Comparison of the # of Online bookings from Hot Pepper, Tabelog and Gurunavi
Mn ppl
Source: Company data, Hearing, . Morgan
Notes: 1) Gurunavi's figures are based on an average of 5-6 customers per reservation because the site discloses only the number of
reservations (6 per reservation for 3Q only, 5 customers per reservation for other quarters); 2) Gurunavi's and Hot Pepper Gourmet's
figures are based on completed reservations and Tabelog's on the number of customers referred.
0%
50%
100%
150%
200%
0
5
10
15
20
3/16 1Q 3/16 2Q 3/16 3Q 3/16 4Q 3/17 1Q 3/17 2Q 3/17 3Q 3/17 4Q 3/18 1Q 3/18 2Q 3/18 3Q
Hotpepper Gourmet Tabelog
Gurunavi Hotpepper YoY(RHS)
Tabelog YoY(RHS) Gurunavi YoY(RHS)
14
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 41: Comparison of the # of Restaurants with Online
Reservations
restaurants
Source: Booking websites, . Morgan
Source: Hot Pepper, Tabelog’s immediate reservation number = Tokyo Shoko Research (July-
August 2017). Other figures are from each booking websites (As of Jan 2018).
Figure 42: Comparison of the # of Restaurants with Immediate
Reservations
Website # of restaurants
1 Hot Pepper Gourmet 46,148
2 Tabelog 20,569
3 Gurunavi 16,461
4 Yahoo!Dining 15,443
5 IKYU 5,043
6 OpenTable 2,015
7 Ozmall 1,556
8 Retty 745
9 Rakuten Dining 260
Source: Tokyo Shoko Research, . Morgan
Note: July-August 2017
Steady growth for Tabelog since its adoption of a new plan; focus on
maximizing media value
Tabelog, which has the greatest media power, introduced in 2017 a new plan with
fees based on the number of online reservations (¥200 per person for dinner). The
number of online reservations has risen sharply as a result of a reward point program
for diners and efforts to get restaurants to make spots available. Tabelog also offers a
reservation service called Yoyaku Note, but Tabelog has not promoted it heavily
because of difficulties in differentiating it from competitors. Instead, the business is
focused on maximizing its media value (referring as many people as possible to
restaurants and getting paid commensurately). If restaurants' management of
available spots is the bottleneck for the penetration of online reservations, steady
longer-term growth will probably require efforts to offer more convenience to
restaurants, through linkages with other companies' reservation systems, for example.
Figure 43: # of New/Old Plans Introduced and Trend of ARPU
Restaurant, ¥
Source: Company data, . Morgan estimate
Figure 44: Revenue Breakdown for Tabelog
¥ million
Source: Company data, . Morgan estimate
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
O
nl
in
e
re
se
rv
at
io
n
Im
m
ed
ia
te
re
se
rv
at
io
n
O
nl
in
e
re
se
rv
at
io
n
Im
m
ed
ia
te
re
se
rv
at
io
n
O
nl
in
e
re
se
rv
at
io
n
Im
m
ed
ia
te
re
se
rv
at
io
n
Hotpepper Gurunavi Tabelog
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2015/3 2016/3 2017/3 2018/3E 2019/3E 2020/3E 2021/3E
New plan Old plan ARPU(Yen)
0%
10%
20%
30%
40%
0
10,000
20,000
30,000
40,000 Restaurants
User subscription
Ads
Others
Total YoY(RHS)
15
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Gurunavi lagging but might make up lost ground with Toreta
Gurunavi's number of online reservations has risen 40% YoY, but the company has
been somewhat reluctant to get online reservations to catch on, in light of the costs
for restaurants, and lags in the area of immediate reservations, which are very
convenient for diners. It could be viewed as a result of a pursuit of convenience for
both restaurants and diners, such as enhancements to plan reservations and the
offering of information on private rooms and other detail availability. However, it
may have led to a decline in the power of the medium that restaurants perceive, as a
result of a diminished presence in online booking, where the customer referral route
is visible. However, Gurunavi, which uses Toreta as its reservation system and began
sales in October, could make up some lost ground. Toreta is well regarded for the
convenience it offers restaurants and is already used by more than 10,000 restaurants.
If Toreta makes it easy for restaurants to make reservations available to Gurunavi,
online reservations on Gurunavi could get a boost, and we will focus on
developments.
Is conquering reservation management systems the key to conquering online
reservations?
The reservation booking sites have focused on attracting restaurants and increasing
the number of tables available because the number of spots that can be reserved is
more important than the number of restaurants that can be reserved. One dilemma, a
chicken or the egg situation, is that the number of available spots must be increased
in order for online reservations to catch on, but restaurants need to sense the benefits
of online reservations in order to make more spots available. Reservation booking
sites have been promoting their services by offering diners reward points, but many
restaurants are hesitant on online reservations because the disadvantages (the hassles
of managing the reservations and the risk of overbookings, for example) outweigh
the advantages (more efficient operations and a boost to revenue). Many restaurants
still manage reservations on paper, but online reservation management services have
become more common, and if a service becomes the de facto standard, then the
booking sites would have to link their online reservation information. The company
with the de facto standard reservation management system would have all
restaurants' reservation information and could use it for the marketing of its own site
and expansion of services.
Reservation management services (reservation ledgers) that have large market shares
include Recruit's Restaurant Board and Toreta, which does not have a media site.
offers Yoyaku Note but has not promoted it heavily because its top
priority is on growth as a medium. Gurunavi developed its own reservation
management system but adopted Toreta and began sales in October. As a result, the
battle in the reservation management system business appears to be a one-on-one
contest between Restaurant Board and Toreta. The latter has caught on mainly
among high-end restaurants with strong reservation needs, while the former has
caught on mainly among relatively inexpensive restaurants that cater to drinking
parties and are listed on Hot Pepper Gourmet.
16
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Recruit and Gurunavi have substantially shifted direction
toward business support
Will the winners in reservation management also win in business support?
Reservation management is tied to not only seat management but also customer
relationship management. Restaurants have not compiled reservation information or
been in tune with the concept of customer relationship management because most
have managed reservations on paper and taken most reservations by phone.
Restaurant managers have done business in an analog way, relying on the number of
customers, the average amount spent per customer, and experience and intuition.
However, managing customers based on data allows restaurants to strategically
acquire repeat customers who substantially affect restaurants' businesses. Restaurants
can compile detailed customer data, including who ordered what and when, by
linking their POS and reservation management systems, and can use the data to
provide customized service when customers visit next time.
It would also become easier for reservation management service providers to use the
data to offer business support services for managing customers. We listed a
comparison of major reservation ledgers (reservation management services) and POS
(Figure 45). For reservation ledgers, providers that have media have a strength in that
ledgers are automatically updated with internet reservation information that comes
through their media, and we think Toreta has a slight lead here in terms of
functionality. Recruit, which has gone on the offense with Restaurant Board and
AirREGI, appears to be in the lead in the area of business support. These are likely to
be used widely by Hot Pepper Gourmet clients, but we think it is somewhat
optimistic to expect Restaurant Board to become the de facto standard reservation
management service for the restaurant industry. Toreta, a reservation management
service already widely used, mainly by popular restaurants, could increasingly catch
on smoothly, thanks to Gurunavi's use of it. In addition, a staff of 1,000 support
people could make the service more competitive than before, given the need to deal
more carefully with various needs in the case of business support than in the case of
marketing support.
17
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 45: Comparison of Major Reservation Ledgers and Cloud-based POS Systems
Source: Company data, interviews, . Morgan
Provider Recruit Gurunavi
Sertvice name Restaurant Board Yoyaku Note Gurunavi Ledger Toreta
Partner media
Hot Pepper
Gourmet
Tabelog
Gurunavi
Toreta partner media
Gurunavi, Yahoo! Dining,
and others (24 sites)
Fees/stores Free
¥10,000 per month
Free in the f irst fiscal
-
Basic: ¥12,000
Plus: ¥16,000
# of Restaurants
using the system
Over 10,000
(As of Mar 2017)
- -
Over 10,000
(As of now )
Basic features
Reservation management,
Online reservation
cooperation,
customer management,
table management
Reservation management,
Online reservation
cooperation,
customer management
Reservation management
Online reservation
cooperation,
collaboration w ith Gurunavi
POS+
Partnership w ith Toreta
Reservation management,
Online reservation
cooperation,
customer management,
compilation and analysis
Optional features
Message distribution
Webpage production
Internet ad distribution
-
Voice automated
reservation,
phone reservation agent,
etc. (plans to expand
services in 2018)
POS collaboration,
w eb reservation path
compilation customizing,
gourmet site reservation
handling (centralized
management),
reimbursement service,
CTI function,
satisfaction survey
function,
deposits function
Sertvice name AirREGI - Gurunavi POS+ POS+ food SmarRegi
Fees/stores Free -
One-of f fee:¥168,000
¥12,000 per month
One-off fee:¥168,000
¥12,000 per month
Free~¥12,000 per month
(Multiple plans available)
# of Restaurants
using the system
Over 305,000
(As of Sep 2017)
- - -
Over 40,000
(As of July 2017)
Basic features
Order and accounting,
inspection and settlement,
sales analysis,
customer management,
product management,
credit card settlement, etc.
-
Attendance management,
sales management,
tax-exemption feature
Adopted POS+
Attendance management,
sales management,
tax-exemption feature
inspection and settlement,
sales analysis,
product management
tax-exemption feature,etc
Optional features
AirPay,
mobile settlements,
restaurant board
collaboration,
sales promotion
assistance, etc.
-
Order entry system,
table top order,
Gurunavi Pay
Order entry system,
table top order
Multiple stores
management,
User view ing rights setup,
Use of API,
Accounting service
collaboration,
customer management,
phone support,
Order entry
Reservation ledgers(Reservation management service)
Single-business player
POS
18
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Gurunavi focusing on service expansion, centered on Gurunavi POS+
The company aims to expand its services centered on Gurunavi POS+, a cloud-based
POS system, and its reservation system (based on the Toreta platform). It
differentiates itself from other services by focusing entirely on restaurants and offers
proprietary additional functionality, for example, the ability to use such POS system
options as tabletop ordering and order entry systems (the monthly usage fee is
¥12,000, not including options). The Toreta-based reservation management system is
scheduled to include the ability to incorporate reservations by phone (with interactive
voice response systems or answering services). The company aims to support high-
impact repeat marketing by combining POS data, customer and reservation
information, and proprietary data.
Figure 46: Gurunavi Growth Potential
Source：Gurunavi IR material, . Morgan
Toreta, which Gurunavi has partnered with
Toreta, which was founded in 2013, offers a cloud-based reservation management
service by the same name. The service is already used by more than 10,000
restaurants, mainly high-end ones. It competes against Recruit's Restaurant Board
and 's Yoyaku Note. The service is convenient and has received support
from restaurants, partly because there is no need to focus on developing one's own
medium. The number of restaurants that use it is not that large, but the service has a
greater presence than numbers suggest in that it has available spots at popular
restaurants (those with a Tabelog score of at least ). The company already offers
not only seat management but also customer management capabilities. As such, it has
brought innovation to the restaurant industry, where the concept of customer
relationship management had been more or less a foreign one. Reservation data is not
compiled into a database, though. Over the longer term, the company might expand
into the Asian restaurant market, which has grown rapidly, or other industries in
Japan, such as salons, lodging, and clinics.
19
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Recruit strengthening business support with centered on AirREGI and
Restaurant Board
The company has offered at no charge AirREGI, a POS cash register app released in
November 2013, and Restaurant Board, a reservation management app released in
May 2016. It started offering in November 2016 a business support package
(¥18,000 a month) that enables the use of premium options (message delivery service,
a website, and online advertising). AirREGI and Restaurant Board have rapidly
caught on, partly because they are free, and could become the de facto standard with
restaurants which do relatively well on Hot Pepper Gourmet (relatively inexpensive
izakayas and casual restaurants). The strategy borrows from the one used by Salon
Board, the leader in the beauty salon business (52,000 salons were using it as of end-
March 2017). However, we think it would be optimistic to expect similar results in
the very competitive restaurant business because of the substantial contributions from
Hot Pepper Beauty's dominant share as a medium in the beauty salon business.
Figure 47: Hot Pepper Gourmet Growth Potential
Source：Recruit IR material, . Morgan
20
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
(2371)
Tabelog's growth has been priced into the stock
Possible rebound to double-digit profit growth next fiscal year, but could be
difficult to sustain: We revise our earnings estimates based on recent trends. In
conjunction with our revisions of our medium-term estimates and macro
assumptions, we raise our price target from ¥1,600 to ¥1,800. Overall profit
growth could rebound to the double digits next fiscal year as a result of steady
acquisitions of restaurants for Tabelog under new plan contracts and increased
penetration of online booking. However, we do not think double-digit growth will
be easy to sustain without a rebound in 's momentum and increased
contributions from new media. The stock's valuation has improved with help
from share buybacks announced in September (and the retirement of 2% of the
number of shares outstanding). However, we think Tabelog's growth has been
priced into the stock and find it difficult to seek additional upside.
Not optimistic on momentum continuing, even if online booking grows
steadily: With a gradual increase in contributions from online booking revenue
(¥200 per person for dinner), in conjunction with the proliferation of restaurants
under new plan contracts, we think ARPU will rise steadily through next fiscal
year (from ¥22,660 in FY2017 to ¥26,540 in FY2018). There was a boost of
¥8,600 per restaurant in September, and the amount is likely to decline with
regional expansion, but management assumes a ¥7,000-8,000 addition over the
medium term. However, volume-based fee revenue is unlikely to contribute that
much to profits next fiscal year because of commissions (which are to decline
from 20% to 5% in two years) and reward point costs (about 40%). We are also
not optimistic on online booking momentum holding up as a shortage of available
tables, an industrywide bottleneck, needs to be addressed.
doing all it can to increase revenue: The business is likely to
grow revenue. The O2O (online to offline) business that the company started with
Bic Camera in October could be a source of upside, and the advertising business,
where YoY comparisons are easy and the company has been taking some
initiatives, is likely to recover gradually. However, we doubt that it will get back
on a growth track because of lingering concerns about the shift to mobile and the
high dependence of the shopping and advertising businesses on consumer
electronics, where business conditions are not great.
Company Data
Price (¥) 1,915
Date Of Price 24 Jan 18
Market Cap (¥ bn)
Market Cap ($ bn)
Shares O/S (mn) 211
52-week Range (¥) 2,082-1,286
TOPIX 1,
DPS (¥)
Dividend Yield %
ROE %
Price Target (¥) 1,800
Price Target End Date 31-Dec-18
, Inc. (Reuters: , Bloomberg: 2371 JT)
2015/3 2016/3 2017/3 2018/3 E 2019/3 E 2020/3 E 2021/3 E
Sales (¥ bn)
Operating Profit (¥ bn)
Pretax Profit (¥ bn)
Net Profit (¥ bn)
EPS (¥)
P/E (x)
P/B (x)
EV/EBITDA (x)
Source: Company data, Bloomberg, . Morgan estimates.
Neutral
,2371 JT
▲
Price: ¥1,915
Price Target: ¥1,800
Previous: ¥1,600
Japan
Internet, Games, Media
Haruka Mori
AC
(81-3) 6736-8632
@
Bloomberg JPMA MORI <GO>
JPMorgan Securities Japan Co., Ltd.
YTD 1m 3m 12m
Abs % % % %
Rel % % % %
1,200
1,600
2,000
2,400
¥
Jan-17 Apr-17 Jul-17 Oct-17 Jan-18
Price Performance
share price (¥)
TOPIX (rebased)
21
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
(2371)
Company Profile
Established in 2000. Main services are price comparison site
and restaurant word of mouth site Tabelog.
Other businesses include real estate and housing site Sumaity
and travel word of mouth site 4travel.
Sales by Segment, FY2016
Source: Company data.
Investment Thesis Risk Analysis
Upside Scenario to Target
Price/Rating
Greater-than-expected increase in Tabelog fees paid by
member restaurants
Sooner-than-expected monetization of O2O service for
Growth of travel and real estate businesses accelerates
quickly
Downside Scenario to Target
Price/Rating
Increased competition in price comparison services
Slowing growth for Tabelog
Weaker consumption due to rapid deterioration of macro
environment
Operating Profit Forecasts: . Morgan versus Consensus
¥ billion
. Morgan Consensus
FY2017E
FY2018E
Source: . Morgan estimates, Bloomberg.
Valuation
Our DCF-based price target through December 2018 is
¥1,800. Our DCF assumptions are a risk free rate of 1%, a
market risk premium of %, beta of % and a terminal
growth rate of %. Our price target equates to 24x our
FY2017 EPS forecast.
Assumptions & Sensitivity Metrics (Impact on FY2017 Profits)
Factor Current Change Impact
Assumption OP NP
NA
Source: . Morgan estimates
Peer Valuations Based on Bloomberg Consensus
Bloomberg Market Cap P/E (x) EV/EBITDA (x) ROE(%)
Company name Ticker Currency Price Price date ($mn) FY17E FY18E FY19E FY17E FY18E FY19E FY17E
Yahoo Japan Corp 4689 JP JPY 538 Jan-24 27,883
Rakuten Inc 4755 JP JPY 985 Jan-24 12,850
Inc 2371 JP JPY 1,915 Jan-24 3,669
ASKUL Corp 2678 JP JPY 3,435 Jan-24 1,727
CyberAgent Inc 4751 JP JPY 4,445 Jan-24 5,113
Gurunavi Inc 2440 JP JPY 1,380 Jan-24 611
Alphabet Inc goog us USD 1,170 Jan-23 814,893
Inc amzn us USD 1,363 Jan-23 656,570
Facebook Inc fb us USD 189 Jan-23 552,604
Tencent Holdings Ltd 700 hk HKD 475 Jan-23 576,562
NAVER Corp 035420 ks KRW 878,000 Jan-24 27,077
Source: Bloomberg Note: Market caps are calculated using forex rates as of Jan. 24.
Shopping
()
, 21%
Service
()
, 18%
Advertising
()
, 10%
Tabelog, 43%
New Media,
6%
Finance, 2%
22
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 48: : New and Old . Morgan Estimates
¥ billion, ¥, x
Revenue YoY OP YoY RP YoY NP YoY EPS P/E
3/17
3/18E new % % % %
3/18E old % % % %
3/18CoE % % % %
3/19E new % % % %
3/19E old % % % %
3/20E new % % % %
3/20E old % % % %
3/21E new % % % %
Source: Company data, . Morgan estimates
Note: Price as of Jan. 24
23
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 49: : Annual Basis PL
¥ million
J-GAAP← →IFRS
14/3 15/3 16/3 17/3 17/3 18/3E 19/3E 20/3E 21/3E 18/3CoE
Sales 29,814 35,787 41,275 45,089 43,464 46,200 51,200 55,000 58,700 48,000
Cost of goods sold 2,343 3,375 3,876 4,493 - - - - - NA
Gross profits 27,471 32,412 37,399 40,596 - - - - - NA
SG&A expense 12,791 15,603 17,864 19,435 - - - - - NA
Operating expense 15,132 18,350 21,739 23,928 22,014 23,100 25,700 27,200 28,700 NA
Advertising 3,740 3,927 4,158 4,172 4,172 4,760 5,300 5,800 6,000 NA
Commission 2,696 4,111 5,248 6,108 6,108 6,380 7,400 7,940 8,730 NA
Personnel-related 4,766 5,508 5,920 6,244 5,950 6,280 6,600 6,800 7,000 NA
Outsourcing 1,245 1,650 2,317 2,309 2,309 2,360 2,500 2,600 2,700 NA
Depreciation 498 670 850 1,124 1,124 1,290 1,400 1,500 1,600 NA
Rent 563 615 697 780 780 810 850 900 900 NA
Other 1,624 1,869 2,549 3,191 1,568 1,230 1,600 1,700 1,800 NA
Other income 0 11 10 0 0 0 NA
Other expenses 0 13 10 0 0 0 NA
Operating expense 14,681 16,809 19,535 21,161 21,447 23,100 25,500 27,800 30,000 23,300
Advertising 81 81 58 8 9 0 0 0 0 NA
Equity in net income of affiliates - - - - 0 0 0 0 0 NA
Other non-operating income 12 278 -12 -6 - - - - - NA
Recurring profits 14,774 17,168 19,581 21,164 - - - - - NA
Extraordinary income 0 0 0 37 - - - - - NA
Extraordinary losses 0 15 12 0 - - - - - NA
Pretax profits 14,774 17,153 19,568 21,201 21,457 23,100 25,500 27,800 30,000 23,250
Taxes 5,735 6,286 6,447 6,324 6,606 7,390 8,160 8,900 9,600 NA
Minority interests -27 -23 21 39 39 30 30 30 30 NA
Net profits attributable to
owners of the parent
company 9,066 10,890 13,100 14,839 14,812 15,680 17,310 18,870 20,370 15,850
EBITDA 15,308 17,658 20,571 22,493 22,779 24,570 27,080 29,480 30,000 NA
EPS (¥)
Fully diluted (¥) - - - - - NA
DPS (¥) 13 16 21 28 28 32 36 39 42 32
CFPS (¥) NA
BPS (¥) NA
% YoY
Sales
Operating profit
Pretax profit
Net profit
% of sales
Gross profits
SG&A expense
Operating profit
Pretax profit
Net profits
Source: Company data, . Morgan estimates
24
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 50: : Segment PL
¥ million
J-GAAP← →IFRS
14/3 15/3 16/3 17/3 17/3 18/3E 19/3E 20/3E 21/3E
[Segment sales]
a) Shopping () 8,721 8,904 9,298 9,138 9,138 9,130 9,170 9,100 9,030
% of total
b) Service () 7,173 6,944 7,220 7,985 7,985 8,670 9,240 9,680 10,050
% of total
c) Advertising () 3,774 4,144 4,450 4,162 4,162 4,020 4,040 4,140 4,290
% of total
d) Tabelog 7,695 12,476 15,782 18,606 18,606 20,470 24,280 27,190 29,920
% of total
Restaurants 4,581 8,213 10,362 12,521 12,521 14,850 18,330 21,120 23,810
No. of member 32,000 42,200 49,000 53,100 53,100 56,100 59,000 62,000 64,600
Average ARPU during the
period(Y) 16,600 18,450 18,940 20,440 20,440 22,660 26,540 29,090 31,350
Users subscription 1,055 1,768 2,726 3,523 3,523 3,200 3,290 3,270 3,210
Advertising 1,948 2,421 2,624 2,531 2,531 2,420 2,660 2,800 2,900
Other (Old:Online
reservation) 105 67 61 33 33 0 0 0 0
e) New Media, Finance 2,448 3,318 4,525 5,192 3,555 3,950 4,450 4,920 5,420
% of total
e)-1 New Media 0 0 0 4,264 2,629 2,870 3,260 3,610 3,980
% of total - - - -
Old) Travel/Real Estate 1,712 2,408 3,498 4,263 - - - - -
% of total - - - - -
4Travel 401 496 604 619 619 750 830 910 1,000
Time Design - 788 1,358 1,861 238 260 290 320 350
YoyaQ 351 324 279 269 269 250 250 250 250
Mansion DB, Sumaity 776 585 808 938 938 1,030 1,130 1,240 1,360
176 201 223 254 254 300 330 360 400
kinarino 120 220 330 430 520
Others 9 13 288 308 308 60 100 100 100
e)-2 Finance 735 909 1,026 926 926 1,080 1,190 1,310 1,440
% of total
Total 29,814 35,787 41,275 45,089 43,450 46,200 51,200 55,000 58,700
% YoY
[Segment sales]
a) Shopping ()
b) Service ()
c) Advertising ()
d) Tabelog
e) New Media, Finance
e)-1 New Media
Old) Travel/Real Estate
4Travel
Time Design - -
YoyaQ
Mansion DB, Sumaity
kinarino
Others 2,
e)-2 Finance
Total
Source: Company data, . Morgan estimates
25
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 51: : Quarterly Basis PL
¥ million
J-GAAP← →IFRS
17/3 17/3 18/3 18/3CoE
1Q 2Q 1H 3Q 4Q 2H 1Q 2Q 1H 1Q 2Q 1H 3QE 4QE 2HE 2H E
Sales 10,464 11,380 21,844 11,405 11,840 23,246 10,189 10,633 20,822 10,651 11,018 21,669 12,010 12,570 24,580 26,300
Cost of goods sold 1,005 1,466 2,471 1,008 1,015 2,023 - - - - - - - - NA
Gross profits 9,459 9,913 19,373 10,398 10,825 21,223 - - - - - - - - NA
SG&A expense 4,605 4,734 9,340 4,999 5,096 10,095 - - - - - - - - NA
Operating expense 5,610 6,201 11,811 6,006 6,111 12,117 5,280 5,400 10,680 5,552 5,619 11,171 5,900 6,050 11,950 NA
Advertising 838 926 1,764 1,135 1,273 2,408 838 926 1,764 1,079 1,136 2,215 1,200 1,340 2,540 NA
Commission 1,475 1,623 3,098 1,479 1,531 3,010 1,475 1,623 3,098 1,436 1,502 2,938 1,680 1,760 3,440 NA
Personnel-related 1,601 1,570 3,171 1,571 1,502 3,073 1,540 1,510 3,050 1,589 1,587 3,176 1,600 1,500 3,100 NA
Outsourcing 582 514 1,096 603 610 1,213 582 514 1,096 583 578 1,161 600 600 1,200 NA
Depreciation 257 261 518 284 322 606 257 261 518 315 328 643 300 350 650 NA
Rent 197 192 389 195 196 391 197 192 389 202 203 405 200 200 400 NA
Other 660 1,115 1,775 739 677 1,416 387 368 755 348 285 633 300 300 600 NA
Other income 1 1 2 1 3 4 0 0 0 NA
Other expenses 0 13 13 0 10 10 0 0 0 NA
Operating profits 4,854 5,179 10,033 5,399 5,729 11,128 4,910 5,221 10,131 5,100 5,392 10,492 6,110 6,520 12,630 12,800
Financial balance 1 4 5 0 4 4 -2 3 1 -2 4 2 0 0 0 NA
Equity in net income of
affiliates - - - - - - - - - -3 -13 -16 0 0 0 NA
Other non-operating income 0 -15 -15 0 9 9 - - - - - - - - - NA
Recurring profits 4,854 5,168 10,023 5,404 5,736 11,141 - - - - - - - - - NA
Extraordinary income 34 0 34 0 3 3 - - - - - - - - - NA
Extraordinary losses 0 0 0 0 0 0 - - - - - - - - - NA
Pretax profits 4,888 5,169 10,057 5,404 5,739 11,144 4,908 5,223 10,131 5,096 5,382 10,478 6,110 6,510 12,620 12,800
Taxes 1,401 1,607 3,009 1,678 1,637 3,315 1,452 1,673 3,125 1,619 1,708 3,327 1,920 2,140 4,060 NA
Minority interests 7 16 24 15 0 15 8 16 24 -3 15 12 10 10 20 NA
Net profits 3,479 3,545 7,025 3,711 4,103 7,814 3,449 3,533 6,982 3,477 3,662 7,139 4,180 4,360 8,540 8,700
% YoY
Sales
Operating profit
Pretax profit - - - -
Net profit - - - -
% of sales
Gross profits
SG&A expense
Operating profits
Pretax profit
Net profits
Source: Company data, . Morgan estimates
26
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 52: : Segment PL (Quarterly)
¥ million
17/3 18/3
1Q 2Q 1H 3Q 4Q 2H 1Q 2Q 1H 3QE 4QE 2HE
[Segment sales]
a) Shopping () 2,230 2,271 4,501 2,366 2,271 4,637 2,213 2,196 4,409 2,405 2,315 4,720
% of total
b) Service () 1,882 1,859 3,741 1,835 2,409 4,244 2,095 2,023 4,118 1,980 2,570 4,550
% of total
c) Advertising () 845 1,030 1,875 1,194 1,093 2,287 816 923 1,739 1,180 1,100 2,280
% of total
d) Tabelog 4,389 4,606 8,995 4,843 4,768 9,611 4,654 4,909 9,563 5,470 5,440 10,910
% of total
Restaurants 2,952 3,070 6,022 3,207 3,292 6,499 3,367 3,565 6,932 3,890 4,030 7,920
No. of member 50,000 51,500 - 52,900 53,100 - 53,100 54,600 - 55,800 56,100 -
Average ARPU during the
period(Y) 19,880 20,160 - 20,480 20,700 - 21,140 22,070 - 23,490 24,010 -
Users subscription 849 862 1,711 897 915 1,812 760 813 1,573 810 820 1,630
Advertising 575 662 1,237 733 561 1,294 527 531 1,058 770 590 1,360
Other (Old:Online reservation) - - - - - - - -
e) New Media, Finance 842 861 1,703 852 999 1,851 872 966 1,838 970 1,140 2,110
% of total
e)-1 New Media 598 633 1,231 648 750 1,398 606 689 1,295 730 840 1,570
% of total
4Travel 160 166 326 133 160 293 157 215 372 170 210 380
Time Design 42 86 128 71 39 110 45 87 132 80 50 130
YoyaQ 57 75 131 76 62 138 54 61 115 70 60 130
Sumaity 201 184 384 219 335 554 222 201 423 240 370 610
59 63 121 67 66 133 67 72 139 80 80 160
kinarino 25 25 50 40 30 70 46 50 96 70 50 120
Others 54 34 138 42 58 170 15 2 17 20 20 40
e)-2 Finance 243 228 473 204 249 453 267 277 544 240 300 540
% of total
Total 10,189 10,633 20,822 11,095 11,547 22,642 10,651 11,020 21,670 12,010 12,570 24,580
% YoY
[Segment sales]
a) Shopping ()
b) Service ()
c) Advertising ()
d) Tabelog
e) New Media, Finance
e)-1 New Media
4Travel
Time Design
YoyaQ
Sumaity
kinarino
Others
e)-2 Finance
Total
Source: Company data, . Morgan estimates
27
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 53: : BS and CF
¥ million
13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E
[Balance sheet]
Current assets 23,568 30,167 30,348 34,674 37,042 39,252 48,856 59,382 70,779
Cash and deposits 18,915 24,882 24,773 28,319 30,890 32,960 41,931 51,976 62,904
Accounts receivable 3,927 4,642 4,950 5,765 5,431 5,565 6,167 6,624 7,070
Marketable securities - - - - 0 0 0 0 0
Inventories 6 11 21 - 0 0 0 0 0
Other 719 631 604 590 721 728 759 782 805
Fixed assets 1,497 2,504 3,065 4,230 5,087 4,598 4,818 5,038 5,258
Tangible assets 494 781 924 856 914 1,144 1,364 1,584 1,804
Intangible assets 577 991 1,515 1,979 2,152 2,152 2,152 2,152 2,152
Investment and other assets 426 732 627 1,396 2,022 1,302 1,302 1,302 1,302
Total assets 25,064 32,670 33,413 38,904 42,129 43,850 53,674 64,420 76,037
Current liabilities 5,860 6,019 6,623 6,623 6,495 6,502 6,535 6,560 6,584
Accounts payable 1,207 305 366 422 296 303 336 361 386
Short-term loans payable - - - - 0 0 0 0 0
Other 4,653 5,714 5,714 5,714 6,199 6,199 6,199 6,199 6,199
Long-term liabilities 126 222 158 170 236 236 236 236 236
Long-term loans payable - - - - 0 0 0 0 0
Other 126 222 158 170 236 236 236 236 236
Total liabilities 5,986 6,241 6,782 6,793 6,731 6,738 6,771 6,796 6,820
Shareholder's equity 18,867 25,969 26,187 31,645 34,891 36,860 46,621 57,312 68,874
Minority interests and
others 167 225 162 183 222 252 282 312 342
Total net assets 19,079 26,430 26,631 32,111 35,398 37,112 46,903 57,624 69,217
Total of liabilities and net
assets 25,064 32,670 33,413 38,904 42,129 43,850 53,674 64,420 76,037
Net debt -19,246 -25,082 -24,998 -28,545 -31,336 -33,406 -42,376 -52,422 -63,350
% of total assets
Current assets
Fixed assets
Current liabilities
Total shareholders' equity
ROE(%)
ROA(%)
[Cash flow]
Operating profits after taxes 7,090 9,066 10,890 13,100 14,839 15,680 17,310 18,870 20,370
Depreciation 462 537 767 1,012 1,307 1,470 1,580 1,680 1,780
Amortization 91 91 82 25 25 0 0 0 0
Increase in working capital 516 1,617 247 993 -442 126 569 433 421
Capital expenditures 485 1,141 1,287 1,416 1,601 1,700 1,800 1,900 2,000
Free cash flow (FCF) 6,118 7,395 10,337 11,021 14,461 15,291 16,521 18,217 19,729
Source: Company data, . Morgan estimates
28
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Investment Thesis, Valuation and Risks
(2371) (Neutral; Price Target: ¥1,800)
Investment Thesis
Overall profit growth could rebound to the double digits next fiscal year as a result of
steady acquisitions of restaurants for Tabelog under new plan contracts and increased
proliferation of online booking. However, we do not think the growth will be easy to
sustain without a rebound in 's momentum and increased contributions
from new media. Also, we think Tabelog's growth has been priced into the stock and
find it difficult to seek additional upside.
Valuation
Our DCF-based price target through December 2018 is ¥1,800. Our DCF
assumptions are a risk free rate of 1%, a market risk premium of %, beta of %
and a terminal growth rate of 1%. Our price target equates to 24x our FY2018 EPS
forecast.
Risks to Rating and Price Target
Upside Scenario to Target Price/Rating
Greater-than-expected increase in Tabelog fees paid by member restaurants
Sooner-than-expected monetization of O2O service for
Growth of travel and real estate businesses accelerates quickly
Downside Scenario to Target Price/Rating
Increased competition in price comparison services
Slowing growth for Tabelog
Weaker consumption due to rapid deterioration of macro environment
29
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
(2371): Summary of Financials
Income statement ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E Cash Flow statement ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E
Revenues Operating CF 17 17 18 20
Cost of revenue - D&A 1 1 2 2
Operating expenses - - - - Net change in working capital 0 (0) (1) (0)
EBITDA 23 25 27 29 Investment CF (5) (5) (5) (5)
Depreciation (1) (1) (2) (2) Capex (2) (2) (2) (2)
Operating profit (EBIT) 21 23 26 28 Net change in investments - - - -
Other income - Free cash flow 15 15 17 18
Other expenses - - - - Financing CF (6) (7) (8) (8)
Pretax income Net debt (cash) - - - -
Abnormal items (net) 0 0 0 0 Change in Net debt (cash) - - - -
Income taxes (7) (7) (8) (9)
Minorities (0) (0) (0) (0)
Net income - GAAP 15 16 17 19
Diluted shares outstanding (mn) 216 211 211 211
Balance Sheet ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E Ratio Analysis 2017/3 2018/3E 2019/3E 2020/3E
Total assets 42 44 54 64 Gross Margin - - - -
Cash and cash equivalents 31 33 42 52 EBITDA margin % % % %
Trade receivable 5 6 6 7 ROCE % % % %
Other current assets 1 1 1 1 Return on equity (ROE) % % % %
Net Tangible fixed assets 1 1 1 2 D/E ratio - - - -
Net intangible fixed assets 2 2 2 2 Div payout ratio % % % %
Investments/other assets 2 1 1 1
Total liabilities 6 7 7 7
Short term debt - - - -
Other short term liabilities 6 6 6 6
Long term debt - - - -
Other long term liabilities - - -
Minority interests 0 0 0 0
Total Equity 36 37 47 58
Source: Company data and . Morgan estimates
Note: ¥ in billions (except per-share data).Fiscal year ends Mar
30
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Gurunavi (2440)
Road to profit recovery a long one, but positive on direction
of strategy
Likely profit decline next fiscal year, as stock-type business needs time to
rebound: We revise our earnings estimates and price target from ¥1,700 to
¥1,400, based on recent trends. We expect operating profit this fiscal year to be in
line with downwardly revised guidance (¥ billion) but then decline 15% YoY
to ¥4 billion next fiscal year, as we think it will take time for earnings to rebound
in the stock-type business, which has substantially shifted direction toward
business support. We also expect negative effects from an absence of resources
allocated to new-restaurant acquisitions and the retention of existing customers,
owing to 1H declines in the number of paying participating restaurants and
ARPU and the reallocation of substantial sales resources in 2H and next fiscal
year from sales support to business support.
Promoting online booking an urgent issue; use of Toreta may lead to
benefits: Gurunavi's business has notably worsened compared with competitors',
owing to a delayed response to online booking, which has rapidly caught on and
plays an important role in terms of offering users greater convenience and making
visible the referral of customers to restaurants. Hot Pepper probably generates
more revenue per restaurant than Gurunavi, but we think the fees it charges
restaurants tend to be justified by the much higher number of online-booking
customers it refers to restaurants. Tabelog is unlikely to be a target of cost-cutting
partly because of its low unit prices and its ability to refer customers. Gurunavi
developed its own reservation booking system but started using Toreta, a well-
regarded booking system that has caught on with restaurants. It could make up
lost ground as a result. The business has also been partnering with major overseas
media on a reservation/payment service and has started to fully monetize a
foreign language version. These are possible sources of upside.
Positive on shift of direction to business support, but speedy business moves
needed: With restaurants dealing with constant increases in labor costs and hiring
difficulties, we think the focus on the business support service, centered on
Gurunavi POS+, is a strategy that makes sense for the longer term. If it includes
business support in its services, retention benefits could be expected, and the
company could develop a more effective sales support service based on customer
and order data.
Company Data
Price (¥) 1,380
Date Of Price 24 Jan 18
Market Cap (¥ bn)
Market Cap ($ bn)
Shares O/S (mn) 49
52-week Range (¥) 2,532-1,296
TOPIX 1,
DPS (¥)
Dividend Yield %
ROE %
Price Target (¥) 1,400
Price Target End Date 31-Dec-18
Gurunavi, Inc. (Reuters: , Bloomberg: 2440 JT)
2015/3 2016/3 2017/3 2018/3 E 2019/3 E 2020/3 E 2021/3 E
Sales (¥ bn)
Operating Profit (¥ bn)
Recurring Profit (¥ bn)
Net Profit (¥ bn)
EPS (¥)
P/E (x)
P/B (x)
EV/EBITDA (x)
Source: Company data, Bloomberg, . Morgan estimates.
Neutral
,2440 JT
▼
Price: ¥1,380
Price Target: ¥1,400
Previous: ¥1,700
Japan
Internet, Games, Media
Haruka Mori
AC
(81-3) 6736-8632
@
Bloomberg JPMA MORI <GO>
JPMorgan Securities Japan Co., Ltd.
YTD 1m 3m 12m
Abs % % % %
Rel % % % %
1,000
1,500
2,000
2,500
3,000
3,500
¥
Jan-17 Apr-17 Jul-17 Oct-17 Jan-18
Price Performance
share price (¥)
TOPIX (rebased)
31
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Gurunavi (2440)
Company Profile
The company, established in 1989, provides an online service
for finding information on restaurants. It focuses on
supporting restaurants' marketing efforts, and its main sources
of revenue are fees from participating restaurants
Sales by Segment, FY2016
Source: Company data.
Investment Thesis Risk Analysis
Upside Scenario to Target
Price/Rating
Greater-than-expected rise in ARPU
Faster-than-expected growth in number of paying
member restaurants
Downside Scenario to Target
Price/Rating
Restaurant industry slumps due to sudden deterioration
in macro conditions
Market share declines on emergence of similar hit
services
Site credibility diminishes due to system problems
Operating Profit Forecasts: . Morgan versus Consensus
¥ billion
. Morgan Consensus
FY2017E
FY2018E
Source: . Morgan estimates, Bloomberg.
Valuation
We base our December 2018 price target of ¥1,400 on a
DCF model assuming a 1% risk-free rate, a % market
risk premium, a beta of , and a terminal growth rate of
%. Our price target works out to 21x our FY2017 EPS
estimate.
Assumptions & Sensitivity Metrics (Impact on FY2017 Profits)
Factor Current Change Impact
Assumption OP NP
NA
Source: . Morgan estimates
Peer Valuations Based on Bloomberg Consensus
Bloomberg Market Cap P/E (x) EV/EBITDA (x) ROE(%)
Company name Ticker Currency Price Price date ($mn) FY17E FY18E FY19E FY17E FY18E FY19E FY17E
Yahoo Japan Corp 4689 JP JPY 538 Jan-24 27,883
Rakuten Inc 4755 JP JPY 985 Jan-24 12,850
Inc 2371 JP JPY 1,915 Jan-24 3,669
ASKUL Corp 2678 JP JPY 3,435 Jan-24 1,727
CyberAgent Inc 4751 JP JPY 4,445 Jan-24 5,113
Gurunavi Inc 2440 JP JPY 1,380 Jan-24 611
Alphabet Inc goog us USD 1,170 Jan-23 814,893
Inc amzn us USD 1,363 Jan-23 656,570
Facebook Inc fb us USD 189 Jan-23 552,604
Tencent Holdings Ltd 700 hk HKD 475 Jan-23 576,562
NAVER Corp 035420 ks KRW 878,000 Jan-24 27,077
Source: Bloomberg Note: Market caps are calculated using forex rates as of Jan. 24.
Restaurant
promotion
services, 91%
Promotions,
3% Related
businesses,
6%
32
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 54: Gurunavi: New and Old . Morgan Estimates
¥ billion, ¥, x
Revenue YoY OP YoY RP YoY NP YoY EPS P/E
3/17 % % % %
3/18E new % % % %
3/18E old % % % %
3/18CoE % % % %
3/19E new % % % %
3/19E old % % % %
3/20E new % % % %
3/20E old % % % %
3/21E new % % % %
3/21E old % % % %
Source: Company data, . Morgan estimates
Note: Price as of Jan. 24
Figure 55: Gurunavi: Annual Basis PL
¥ million
13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E 18/3CoE
Sales 27,265 30,519 32,637 34,617 36,979 36,100 35,700 37,400 39,500 35,800
Cost of goods sold 6,114 7,817 8,683 8,627 8,832 9,800 10,000 10,200 10,400 NA
Gross profits 21,151 22,702 23,954 25,990 28,147 26,300 25,700 27,200 29,100 NA
SG&A expense 18,034 18,554 18,854 19,561 21,406 21,600 21,700 22,000 22,300 NA
Personnel expenses 7,833 8,313 8,867 9,510 9,833 10,500 10,700 10,800 11,000 NA
Rent expenses 1,116 1,106 1,173 1,366 1,565 1,600 1,600 1,600 1,600 NA
Business consignment
expenses 1,879 1,904 2,169 2,331 2,658 2,500 2,500 2,500 2,500 NA
Advertising and promotion
expenses 2,718 3,037 2,458 2,363 2,773 2,500 2,400 2,500 2,500 NA
Others 4,488 4,194 4,187 3,991 4,577 4,400 4,500 4,600 4,700 NA
Operating profits 3,116 4,148 5,100 6,430 6,741 4,700 4,000 5,200 6,800 4,500
Financial balance 7 8 12 13 6 0 0 0 0 NA
Other non-operating
income 40 25 36 50 77 0 0 0 0 NA
Recurring profits 3,153 4,168 5,127 6,492 6,813 4,800 4,100 5,300 6,900 4,500
Extraordinary income 150 39 1 0 0 0 0 0 0 NA
Extraordinary losses 16 1 12 7 0 0 0 0 0 NA
Pretax profits 3,287 4,206 5,116 6,486 6,813 4,800 4,100 5,300 6,900 NA
Taxes 1,327 1,786 1,836 2,118 2,014 1,600 1,350 1,750 2,280 NA
Minority interests 0 0 0 0 0 0 0 0 0 NA
Net profits 1,959 2,421 3,280 4,368 4,799 3,200 2,750 3,550 4,620 3,000
EBITDA 5,009 6,687 7,739 9,271 9,241 7,700 7,500 8,700 10,300 NA
EPS (¥)
Fully diluted (¥) - - - - - NA
DPS (¥)
CFPS (¥) NA
BPS (¥) NA
% YoY
Sales
Operating profit
Recurring profit
Net profit
% of sales
Gross profits NA
SG&A expense NA
Operating profits
Recurring profits
Net profits
Source: Company data, . Morgan estimates
33
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 56: Gurunavi: Segment PL
¥ million
13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E
[Segment sales]
Total promotion services 24,942 27,733 29,876 32,403 34,597 33,698 33,330 35,030 37,140
Restaurant promotion services 24,020 26,808 29,125 31,413 33,590 32,670 32,300 33,900 35,900
Cumulative retained services 22,490 25,109 27,277 28,883 30,952 29,550 28,800 30,100 31,900
Cumulative retained services (ARPU) 37,785 40,810 43,093 43,936 43,771 40,648 39,800 40,600 41,400
Total member restaurants (paid) 50,310 52,235 53,263 56,967 60,886 60,277 60,300 63,300 65,200
Total member restaurants (free) 70,532 74,076 77,039 81,826 87,019
Spot services 1,530 1,698 1,848 2,530 2,638 3,120 3,500 3,800 4,000
Promotions 921 925 751 990 1,007 1,028 1,030 1,130 1,240
Related businesses 2,324 2,786 2,761 2,214 2,382 2,410 2,400 2,400 2,400
Total 27,265 30,519 32,637 34,617 36,979 36,100 35,700 37,400 39,500
[Other benchmarks]
Page Views (million PV/December) 930 1,010 1,100
Unique users per month (million) 34 42 52 57 61
Number of Gurunavi members (million) 10 12 13 14 15
% YoY
[Segment sales]
Total promotion services
Restaurant promotion services
Cumulative retained services
Cumulative retained services (ARPU)
Total member restaurants (paid)
Total member restaurants (free)
Spot services
Promotions
Related businesses
Total
[Other benchmarks]
Page Views (million PV/December)
Unique users per month (million)
Number of Gurunavi members (million)
Source: Company data, . Morgan estimates
34
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 57: Gurunavi: Quarterly PL
¥ million
17/3 18/3 18/3
1Q 2Q 1H 3Q 4Q 2H 1Q 2Q 1H 3QE 4Q E 2H E 2H CoE
Sales 8,764 8,969 17,733 9,633 9,613 19,246 8,791 8,769 17,560 9,330 9,210 18,540 18,200
Cost of goods sold 1,988 2,135 4,123 2,270 2,439 4,709 2,253 2,421 4,674 2,470 2,640 5,110 NA
Gross profits 6,776 6,834 13,610 7,363 7,174 14,537 6,539 6,348 12,887 6,860 6,570 13,430 NA
SG&A expense 4,851 5,198 10,050 5,878 5,479 11,357 5,139 4,923 10,062 5,820 5,700 11,520 NA
Personnel expenses 2,319 2,376 4,695 2,465 2,673 5,138 2,582 2,557 5,139 2,570 2,770 5,340 NA
Rent expenses 379 391 770 384 411 795 412 402 814 400 400 800 NA
Business consignment expenses 595 619 1,214 682 762 1,444 565 528 1,093 680 760 1,440 NA
Advertising and promotion expenses 441 623 1,064 1,181 528 1,709 474 461 935 1,000 600 1,600 NA
Others 1,115 1,189 2,304 1,166 1,107 2,273 1,106 972 2,078 1,170 1,170 2,340 NA
Operating profits 1,925 1,635 3,560 1,485 1,695 3,181 1,400 1,425 2,825 1,040 870 1,910 1,700
Financial balance 1 1 2 2 1 3 3 1 4 0 0 0 NA
Other nonoperating income 5 5 10 6 61 66 3 7 10 0 0 0 NA
Recurring profits 1,931 1,641 3,573 1,490 1,751 3,241 1,405 1,429 2,834 1,040 930 1,970 1,700
Extraordinary income 0 1 1 -1 0 0 0 1 1 0 0 0 NA
Extraordinary losses 0 0 0 0 0 0 0 0 0 0 0 0 NA
Pretax profits 1,931 1,641 3,573 1,490 1,751 3,241 1,405 1,430 2,835 1,040 930 1,970 NA
Taxes 609 523 1,131 468 414 883 450 456 906 300 390 690 NA
Minority interests 0 0 0 0 0 0 0 0 0 0 0 0 NA
Net profits 1,322 1,119 2,441 1,021 1,337 2,358 955 973 1,928 740 530 1,270 1,100
% YoY
Sales
Operating profit
Recurring profit
Net profit
% of sales
Gross profits
SG&A expense
Operating profits
Recurring profits
Net profits
[Segment sales]
Total promotion services 8,243 8,461 16,704 8,957 8,937 17,893 8,276 8,252 16,529 8,640 8,530 17,170
Restaurant promotion services 8,088 8,272 16,360 8,694 8,537 17,230 8,123 8,057 16,180 8,370 8,120 16,490
Cumulative retained services 7,601 7,675 15,276 7,881 7,795 15,676 7,519 7,347 14,865 7,390 7,290 14,680
Cumulative retained services (ARPU) 43,990 43,420 43,705 43,625 42,700 43,163 41,202 40,352 40,777 40,571 40,138 40,355
Total member restaurants (paid) 58,226 59,612 59,612 60,816 60,886 60,886 60,770 60,606 60,606 60,816 60,277 60,277
Total member restaurants (free) 81,529 83,182 83,182 82,466 87,019 87,019 86,536 86,679 86,679
Spot services 487 597 1,084 813 742 1,555 605 710 1,315 980 830 1,810
Promotions 155 190 345 263 400 663 153 196 348 270 410 680
Related businesses 520 508 1,028 677 676 1,353 515 517 1,032 690 690 1,380
Total 8,764 8,969 17,733 9,633 9,613 19,246 8,791 8,769 17,560 9,330 9,200 18,530
% YoY
[Segment sales]
Total promotion services
Restaurant promotion services
Cumulative retained services
Cumulative retained services (ARPU)
Total member restaurants (paid)
Total member restaurants (free)
Spot services
Promotions
Related businesses
Total
Source: Company data, . Morgan estimates
35
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Figure 58: Gurunavi: BS and CF
¥ million
13/3 14/3 15/3 16/3 17/3 18/3E 19/3E 20/3E 21/3E
[Balance sheet]
Current assets 13,196 15,892 17,225 20,889 15,662 16,815 17,505 19,010 21,588
Cash and deposits 7,399 9,449 9,992 12,632 7,923 9,187 9,928 11,218 13,531
Accounts receivable 3,949 4,267 4,409 4,670 4,664 4,553 4,502 4,717 4,982
Inventories 27 53 36 44 0 0 0 0 0
Other 1,821 2,123 2,788 3,543 3,075 3,075 3,075 3,075 3,075
Fixed assets 5,908 6,180 6,441 6,434 8,255 8,239 8,239 8,239 8,239
Tangible assets 980 1,131 1,218 934 1,090 1,090 1,090 1,090 1,090
Intangible assets 3,488 3,610 3,520 3,551 4,823 4,823 4,823 4,823 4,823
Investment and other assets 1,439 1,439 1,703 1,949 2,342 2,326 2,326 2,326 2,326
Total assets 19,104 22,072 23,666 27,323 23,917 25,054 25,744 27,249 29,827
Current liabilities 4,796 5,748 5,997 6,810 5,647 5,641 5,638 5,650 5,665
Accounts payable 201 200 221 288 257 251 248 260 274
Short-term loans payable 0 0 0 0 0 0 0 0 0
Other 4,596 5,548 5,777 6,522 5,390 5,390 5,390 5,390 5,390
Long-term liabilities 209 178 204 216 231 231 231 231 231
Long-term loans payable 0 0 0 0 0 0 0 0 0
Other 209 178 204 216 231 231 231 231 231
Total liabilities 5,006 5,926 6,201 7,026 5,878 5,872 5,870 5,881 5,896
Shareholder's equity 14,077 16,093 17,387 20,240 18,012 19,155 19,848 21,341 23,904
Minority interests and others 0 0 0 0 0 0 0 0 0
Total net assets 14,098 16,146 17,465 20,296 18,039 19,182 19,875 21,368 23,931
Total of liabilities and net
assets 19,104 22,072 23,666 27,323 23,917 25,054 25,744 27,249 29,827
Net debt -7,399 -9,449 -10,492 -13,132 -7,923 -9,187 -9,928 -11,218 -13,531
% of total assets
Current assets
Fixed assets
Current liabilities
Total shareholders' equity
Inventory turnover (days)
ROE(%)
ROA(%)
[Cash flow]
Operating profits after taxes 1,959 2,421 3,280 4,368 4,799 3,200 2,750 3,550 4,620
Depreciation 1,892 2,539 2,640 2,841 2,501 3,000 3,500 3,500 3,500
Increase in working capital 194 345 104 202 -19 -105 -48 203 250
Capital expenditures 3,049 2,890 2,563 2,593 3,954 3,977 3,977 3,977 3,977
Financial balance 232 0 264 246 393 -16 0 0 0
Free cash flow (FCF) 376 1,724 2,989 4,168 2,972 2,345 2,321 2,871 3,893
Source: Company data, . Morgan estimates
36
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Investment Thesis, Valuation and Risks
Gurunavi (2440) (Neutral; Price Target: ¥1,400)
Investment Thesis
We expect operating profit this fiscal year to be in line with management's
downwardly revised forecast (¥ billion) but we think it will take time for earnings
to rebound in the stock-type business, which has substantially shifted direction
toward business support. The adoption of Toreta and the full monetization of a
foreign language version are possible sources of upside.
Valuation
We base our December 2018 price target of ¥1,400 on a DCF model assuming a 1%
risk-free rate, a % market risk premium, a beta of , and a terminal growth rate
of 0%. Our price target works out to 21x our FY2017 EPS estimate.
Risks to Rating and Price Target
Upside Scenario to Target Price/Rating
Greater-than-expected rise in ARPU
Faster-than-expected growth in number of paying member restaurants
Downside Scenario to Target Price/Rating
Restaurant industry slumps due to sudden deterioration in macro conditions
Market share declines on emergence of similar hit services
Site credibility diminishes due to system problems
37
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Gurunavi (2440): Summary of Financials
Income statement ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E Cash Flow statement ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E
Revenues Operating CF 7 6 6 7
Cost of revenue (9) (10) (10) (10) D&A 3 3 4 4
Operating expenses - - - - Net change in working capital 0 0 0 (0)
EBITDA 9 8 8 9 Investment CF (6) (6) (6) (6)
Depreciation (3) (3) (4) (4) Capex (4) (4) (4) (4)
Operating profit (EBIT) 7 5 4 5 Net change in investments - - - -
Other income 0 0 0 0 Free cash flow 3 2 2 3
Other expenses - - - - Financing CF (2) (2) (2) (2)
Pretax income Net debt (cash) (8) (9) (10) (11)
Abnormal items (net) 0 0 0 0 Change in Net debt (cash) 5 (1) (1) (1)
Income taxes (2) (2) (1) (2)
Minorities 0 0 0 0
Net income - GAAP 5 3 3 4
Diluted shares outstanding (mn) 47 49 49 49
Balance Sheet ¥ in billions 2017/3 2018/3E 2019/3E 2020/3E Ratio Analysis 2017/3 2018/3E 2019/3E 2020/3E
Total assets 24 25 26 27 Gross Margin % % % %
Cash and cash equivalents 8 9 10 11 EBITDA margin % % % %
Trade receivable 5 5 5 5 ROCE % % % %
Other current assets 3 3 3 3 Return on equity (ROE) % % % %
Net Tangible fixed assets 1 1 1 1 D/E ratio % % % %
Net intangible fixed assets 5 5 5 5 Div payout ratio % % % %
Investments/other assets 2 2 2 2
Total liabilities 6 6 6 6
Short term debt 0 0 0 0
Other short term liabilities 5 5 5 5
Long term debt 0 0 0 0
Other long term liabilities 0 0 0 0
Minority interests - - - -
Total Equity 18 19 20 21
Source: Company data and . Morgan estimates
Note: ¥ in billions (except per-share data).Fiscal year ends Mar
38
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
JPM Q-Profile
, Inc. (JAPAN / Information Technology)
As Of: 19-Jan-2018 Quant_Strategy@
Local Share Price Current: 12 Mth Forward EPS Current:
PE (1Yr Forward) Current: P/E Relative to Japan Index Current:
Earnings Yield (& Local Bond Yield) Current: % Dividend Yield (Trailing) Current:
ROE (Trailing) Current: Price/Book (Value) Current:
Summary
, Inc. As Of:
JAPAN TICKER 2371 JT Local Price: 1,
Information Technology Internet Software & Services EPS:
Latest Min Max Median Average 2 .+ 2 . - % to Min % to Max % to Med % to Avg
12mth Forward PE
P/BV (Trailing) -41% 116% 30% 36%
Dividend Yield (Trailing) -100% 37% -76% -64%
ROE (Trailing) -53% 11% -16% -18%
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, JPMorgan Quantitative & Derivative Strategy
19-Jan-18
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
-1%
0%
1%
2%
3%
4%
5%
6%
D
e
c/
0
2
A
u
g/
0
3
A
pr
/0
4
D
e
c/
0
4
A
u
g/
0
5
A
pr
/0
6
D
e
c/
0
6
A
u
g/
0
7
A
pr
/0
8
D
e
c/
0
8
A
u
g/
0
9
A
pr
/1
0
D
e
c/
1
0
A
u
g/
1
1
A
pr
/1
2
D
e
c/
1
2
A
u
g/
1
3
A
pr
/1
4
D
e
c/
1
4
A
u
g/
1
5
A
pr
/1
6
D
e
c/
1
6
A
u
g/
1
7
12Mth fwd EY Japan BY Proxy
1,
1,
2,
2,
3,
D
e
c/
0
2
S
e
p/
0
3
Ju
n/
0
4
M
a
r/
0
5
D
e
c/
0
5
S
e
p/
0
6
Ju
n/
0
7
M
a
r/
0
8
D
e
c/
0
8
S
e
p/
0
9
Ju
n/
1
0
M
a
r/
1
1
D
e
c/
1
1
S
e
p/
1
2
Ju
n/
1
3
M
a
r/
1
4
D
e
c/
1
4
S
e
p/
1
5
Ju
n/
1
6
M
a
r/
1
7
D
e
c/
1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
P/B Trailing P/B Forward
D
e
c/
0
2
A
u
g/
0
3
A
p
r/
0
4
D
e
c/
0
4
A
u
g/
0
5
A
p
r/
0
6
D
e
c/
0
6
A
u
g/
0
7
A
p
r/
0
8
D
e
c/
0
8
A
u
g/
0
9
A
p
r/
1
0
D
e
c/
1
0
A
u
g/
1
1
A
p
r/
1
2
D
e
c/
1
2
A
u
g/
1
3
A
p
r/
1
4
D
e
c/
1
4
A
u
g/
1
5
A
p
r/
1
6
D
e
c/
1
6
A
u
g/
1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
D
e
c/
0
2
A
u
g/
0
3
A
p
r/
0
4
D
e
c/
0
4
A
u
g/
0
5
A
p
r/
0
6
D
e
c/
0
6
A
u
g/
0
7
A
p
r/
0
8
D
e
c/
0
8
A
u
g/
0
9
A
p
r/
1
0
D
e
c/
1
0
A
u
g/
1
1
A
p
r/
1
2
D
e
c/
1
2
A
u
g/
1
3
A
p
r/
1
4
D
e
c/
1
4
A
u
g/
1
5
A
p
r/
1
6
D
e
c/
1
6
A
u
g/
1
7
39
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
JPM Q-Profile
Gurunavi, Inc. (JAPAN / Information Technology)
As Of: 19-Jan-2018 Quant_Strategy@
Local Share Price Current: 12 Mth Forward EPS Current:
PE (1Yr Forward) Current: P/E Relative to Japan Index Current:
Earnings Yield (& Local Bond Yield) Current: % Dividend Yield (Trailing) Current:
ROE (Trailing) Current: Price/Book (Value) Current:
Summary
Gurunavi, Inc. As Of:
JAPAN TICKER 2440 JP EQUITY Local Price: 1,
Information Technology Internet Software & Services EPS:
Latest Min Max Median Average 2 .+ 2 . - % to Min % to Max % to Med % to Avg
12mth Forward PE
P/BV (Trailing) -54% 638% 50% 77%
Dividend Yield (Trailing) -100% 0% -62% -63%
ROE (Trailing) -68% 48% -24% -16%
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, JPMorgan Quantitative & Derivative Strategy
19-Jan-18
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
-2%
0%
2%
4%
6%
8%
10%
12%
D
e
c/
0
2
A
u
g/
0
3
A
pr
/0
4
D
e
c/
0
4
A
u
g/
0
5
A
pr
/0
6
D
e
c/
0
6
A
u
g/
0
7
A
pr
/0
8
D
e
c/
0
8
A
u
g/
0
9
A
pr
/1
0
D
e
c/
1
0
A
u
g/
1
1
A
pr
/1
2
D
e
c/
1
2
A
u
g/
1
3
A
pr
/1
4
D
e
c/
1
4
A
u
g/
1
5
A
pr
/1
6
D
e
c/
1
6
A
u
g/
1
7
12Mth fwd EY Japan BY Proxy
1,
1,
2,
2,
3,
3,
D
e
c/
0
2
S
e
p/
0
3
Ju
n/
0
4
M
a
r/
0
5
D
e
c/
0
5
S
e
p/
0
6
Ju
n/
0
7
M
a
r/
0
8
D
e
c/
0
8
S
e
p/
0
9
Ju
n/
1
0
M
a
r/
1
1
D
e
c/
1
1
S
e
p/
1
2
Ju
n/
1
3
M
a
r/
1
4
D
e
c/
1
4
S
e
p/
1
5
Ju
n/
1
6
M
a
r/
1
7
D
e
c/
1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
P/B Trailing P/B Forward
D
e
c/
0
2
A
u
g/
0
3
A
p
r/
0
4
D
e
c/
0
4
A
u
g/
0
5
A
p
r/
0
6
D
e
c/
0
6
A
u
g/
0
7
A
p
r/
0
8
D
e
c/
0
8
A
u
g/
0
9
A
p
r/
1
0
D
e
c/
1
0
A
u
g/
1
1
A
p
r/
1
2
D
e
c/
1
2
A
u
g/
1
3
A
p
r/
1
4
D
e
c/
1
4
A
u
g/
1
5
A
p
r/
1
6
D
e
c/
1
6
A
u
g/
1
7
D
ec
/0
2
A
ug
/0
3
A
pr
/0
4
D
ec
/0
4
A
ug
/0
5
A
pr
/0
6
D
ec
/0
6
A
ug
/0
7
A
pr
/0
8
D
ec
/0
8
A
ug
/0
9
A
pr
/1
0
D
ec
/1
0
A
ug
/1
1
A
pr
/1
2
D
ec
/1
2
A
ug
/1
3
A
pr
/1
4
D
ec
/1
4
A
ug
/1
5
A
pr
/1
6
D
ec
/1
6
A
ug
/1
7
D
e
c/
0
2
A
u
g/
0
3
A
p
r/
0
4
D
e
c/
0
4
A
u
g/
0
5
A
p
r/
0
6
D
e
c/
0
6
A
u
g/
0
7
A
p
r/
0
8
D
e
c/
0
8
A
u
g/
0
9
A
p
r/
1
0
D
e
c/
1
0
A
u
g/
1
1
A
p
r/
1
2
D
e
c/
1
2
A
u
g/
1
3
A
p
r/
1
4
D
e
c/
1
4
A
u
g/
1
5
A
p
r/
1
6
D
e
c/
1
6
A
u
g/
1
7
40
Asia Pacific Equity Research
25 January 2018
JPMorgan Securities Japan Co., Ltd.
Haruka Mori
(81-3) 6736-8632
@
Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made i
