Marketenterprise Co.ltd · TSE:3135
Marketenterprise Co.ltd — FY2021 Earnings Presentation
62 slides from Marketenterprise Co.ltd's earnings presentation, Aug 13, 2021
Slide 1: Results of Operations FY Ended June 30, 2021 and Medium-term Management Plan
Results of Operations for the Fiscal Year Ended June 30, 2021 and Medium-term Management Plan August 13, 2021 MarketEnterprise Co., Ltd. Securities code: 3135
Slide 2: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 1
Slide 3: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 2
Slide 4: Summary of FY6/21 Results of Operations
Summary of FY6/21 Results of Operations Sales and earnings down but consistent with the revised forecast Goals and performance Second-hand online ・ For individuals Profitability improved due to higher advertising efficiency and productivity ・ For companies Big increase in sales because of the growth
Slide 5: Consolidated Statement of Income
Consolidated Statement of Income Sales and earnings down but consistent with the revised forecast FY6/21 FY6/20 results FY6/21 results (Million yen) B/A revised forecasts B/C (A) (B) (C) Net sales 10,904 10,875 -0.3% 10,910 -0.3% Operating profit 655 54 -91.7% 68 -20.8% Ordinary profit 664 32 -95.1%
Slide 6: Results by Business Segment
Results by Business Segment Sales and earnings in the second-hand online business were about the same as the previous fiscal year. Earnings in the media and mobile & telecommunications businesses were down. Change Change (Million yen) FY6/20 FY6/21 (amount) (%) Net sales 10,904 10,875 -28 -0.3% Seco
Slide 7: Consolidated Balance Sheet
Consolidated Balance Sheet No change in financial soundness As of June 30, As of June 30, (Million yen) 2020 2021 Change Main factors Current assets 3,068 2,530 -538 Cash and deposits 1,255 1,469 +213 Due to the increase in collection of receivables posted in the 4Q FY6/20 Accounts receivable-trade
Slide 8: Business Portfolio
Business Portfolio Second-hand Online Business Media Business Mobile & Telecommunications Business For individuals Platform Telecom Platform For companies Service Brand Second-hand Hobbies マガジン 7
Slide 9: Second-hand Online Business Results
Second-hand Online Business Results Sales and earnings were about the same as the previous fiscal year. For companies(Agricultural equipment) sales continue to grow. (Million yen) Net sales (Million yen) Segment profit 8,000 6,702 6,580 700 7,000 187 169 600 547 534 697 6,000 1,061 +52.2% 500 5,000
Slide 10: Media Business Results
Media Business Results Decline in revenue from sending customers to the mobile & telecommunications business but strong sales to external customers (Million yen) Net sales (Million yen) Segment profit 800 600 696 700 481 500 600 519 316 400 500 90 -71.6% 400 300 231 300 200 429 +12.8% 200 380 100 10
Slide 11: Mobile & Telecommunications Business Results
Mobile & Telecommunications Business Results Segment profit decreased because of lower sales incentive fees; shifting to a recurring-revenue profit structure (Million yen) Net sales (Million yen) Segment profit 5,000 450 4,500 400 390 3,873 3,866 4,000 350 3,500 798 -55.3% 300 3,000 1,784 250 2,500
Slide 12: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 11
Slide 13: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 12
Slide 14: I Medium-term Management Plan Goals
I Medium-term Management Plan Goals Building a corporate infrastructure for generating an operating profit of at least ¥2.5 billion over two fiscal years in order to meet the listing standard of the new Prime Market of the Tokyo Stock Exchange 13
Slide 15: Goals: Listing Standards of the New Prime Market
I Medium-term Management Plan Goals: Listing Standards of the New Prime Market Achievement of the level of earnings required for a new listing Item 1 Item 2 Standard Number of Shareholders More than 800 Floating stock More than 20,000 units Liquidity Standards to Market cap of floating stock At leas
Slide 16: Goals: Performance Targets
I Medium-term Management Plan Goals: Performance Targets FY6/24 Net sales: ¥20 billion (84% higher than in FY6/21) Operating profit: ¥1.2 billion (22.1 times higher than in FY6/21) The goal is two-year operating profit of at least ¥2.5 billion for FY6/24 and FY6/25 15
Slide 17: Goals: Forecasts
I Medium-term Management Plan Goals: Forecasts Building a path for using sales growth to increase earnings to accomplish the goal of a two-year operating profit of at least ¥2.5 billion (Billion yen) First investment First investment Medium-term Second investment (Billion yen) phase after the IPO re
Slide 18: First investment phase after the IPO (June 2016 - June 2018)
I Medium-term Management Plan Goals: First investment phase after the IPO (June 2016 - June 2018) Investments to advance to a growth phase for the machinery, a new business, and the media and mobile & telecommunications categories Start-up period Larger scale of operations Sales/earnings growth peri
Slide 19: First investment recovery phase (June 2019 - June 2020)
I Medium-term Management Plan Goals: First investment recovery phase (June 2019 - June 2020) Earnings growth backed by the machinery, media and mobile & telecommunications categories and acquisitions of businesses to establish a base for the next stage of growth for ME Trading, Oikura and other busi
Slide 20: Current Medium-term Plan (Second investment phase)
I Medium-term Management Plan Goals: Current Medium-term Plan (Second investment phase June 2022 - June 2024) Return the core second-hand services for individuals business to growth and speed up the growth of the machinery category and Oikura Start-up period Larger scale of operations Sales/earnings
Slide 21: Second investment recovery phase (starting June 2025)
I Medium-term Management Plan Goals: Second investment recovery phase (starting in June 2025) Goals are steady growth of earnings backed mainly by consistent growth of second-hand services for individuals and recurring-revenue in the Oikura and mobile & telecommunications businesses Start-up period
Slide 22: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 21
Slide 23: II Key Issues
II Key Issues Three priorities for the MarketEnterprise Group (1) Second-hand online: Return second-hand services for individuals to growth (2) Second-hand online: Create a new strategy for the growth of Oikura (3) Media: Business structure vulnerable to search engine optimization changes 22
Slide 24: Key Issues (1) Return second-hand services for individuals to growth
II Key Issues (1) Return second-hand services for individuals to growth Machinery is growing rapidly but second-hand services for individuals are generally flat (Million yen) FY6/17 FY6/18 FY6/19 FY6/20 FY6/21 5-year CAGR Second-hand online sales 5,619 5,791 6,359 6,702 6,601 4.1% Second-hand servic
Slide 25: Key Issues (2) Create a new strategy for growth of Oikura
II Key Issues (2) Create a new strategy for the growth of Oikura Sales have been low since the 2Q of FY6/21 (Million yen) Quarterly Sales of Oikura 30% 60.0 51.4 20% 48.7 47.9 50.0 45.2 46 44.2 18.4% 41.9 41.1 42.2 41.8 39.9 40.4 10% 11.9% 40.0 8.4% 5.4% 0% 30.0 -1.0% -10% -6.6% 20.0 -20% -17.0% 10.
Slide 26: Key Issues (3) Business structure vulnerable to SEO changes
II Key Issues (3) Business structure vulnerable to search engine optimization changes Page views are declining because of the Google core updates Google Core Updates (10,000 page views ) Media Page Views (Total for 8 media) 1,600 1,400 1,200 1,000 800 600 400 200 0 Jun. Aug. Oct. Dec. Feb. Apr. Jun.
Slide 27: Agenda
Agenda 1. FY6/21 Results of Operations Kenichi Imamura, Director, CFO • Consolidated financial results • Business Segment Performance 2. Medium-term Management Plan Yasushi Kobayashi, President, CEO • I Goals • II Key Issues • III Strategies 26
Slide 28: III Strategies
III Strategies (1) Growth Strategies for Second-hand Online Business ⅰ Growth Strategies for Second-hand Services for Individuals ⅱ Growth Strategies for Machinery (Agricultural and Construction Equipment) ⅲ Growth Strategies for Oikura (2) Media Business Strategies (3) Mobile & Telecommunications B
Slide 29: Growth Strategies for Second-hand Online Business
(1) Growth Strategies for Second-hand Online Business Return the core second-hand services for individuals business to growth and speed up the growth of the machinery category and Oikura Start-up period Larger scale of operations Sales/earnings growth period Stable growth period Second-hand services
Slide 30: Second-hand Services for Individuals: Purchase requests
(1) - i Growth Strategies for Second-hand Services for Individuals : Purchase requests Purchase requests fell to about 320,000 in FY6/21 because of the decision to focus on attracting requests in categories that produce high profit margins (Number of requests) 600,000 500,000 470,000 480,000 390,000
Slide 31: Second-hand Services for Individuals: Net sales
(1) - i Growth Strategies for Second-hand Services for Individuals: Net sales Basically no change in sales (Million yen) 7,000 5,871 5,819 6,000 5,582 5,557 5,350 5,000 4,000 3,000 2,000 1,000 0 FY6/17 FY6/18 FY6/19 FY6/20 FY6/21 30
Slide 32: Business Climate (1) Growth of the second-hand Market
(1) - i Growth Strategies for Second-hand Services for Individuals: Business Climate (1) Growth of the second-hand Market Japan’s second-hand market is expected to continue to grow (Billion yen) 3,500 3,250.0 3,000.0 3,000 2,500.0 2,500 2,350.0 2,150.0 1,993.2 2,000 1,774.3 1,596.6 1,651.7 1,491.6 1
Slide 33: Business Climate (2) Potential Growth of the Second-hand Market
(1) - i Growth Strategies for second-hand Services for Individuals: Business Climate (2) Potential Growth of the Second-hand Market Enormous untapped market; growth in scale of operations needed to stimulate demand Value of household hidden assets in Japan*3 About ¥37 trillion Size of the unneeded p
Slide 34: Second-hand Services for Individuals: More purchase requests and purchasing capabilities
(1) - i Growth Strategies for Second-hand Services for Individuals Build a foundation for the shift to renewed growth of both purchase requests and purchases More Increase in purchase purchasing requests capabilities 33
Slide 35: More purchase requests: 1
(1) - i Growth Strategies for Second-hand Services for Individuals (More purchase requests: 1) More customers by using more methods to attract purchase requests and covering more product categories • Expansion of key words used for attracting customers More • Extensive use of MarketEnterprise SEO me
Slide 36: More purchase requests: 2
(1) - i Growth Strategies for Second-hand Services for Individuals (More purchase requests: 2) Aiming for average annual growth of about 20% (Number of requests) The number of annual purchase requests 600,000 560,000 CAGR：20.1% 500,000 470,000 480,000 460,000 390,000 390,000 400,000 350,000 320,000
Slide 37: Increase in Purchasing Capabilities (1)
(1) - i Growth Strategies for Second-hand Services for Individuals: Increase in Purchasing Capabilities (1) Currently able to complete purchases for only about 20% of customers’ purchase requests Number of purchases: 63,000 (20% of all requests) The number of purchase requests in FY6/21 320,000 Purc
Slide 38: Increase in Purchasing Capabilities (2)
(1) - i Growth Strategies for Second-hand Services for Individuals: Increase in Purchasing Capabilities (2) Increase purchasing capabilities and capacity by increasing the number of locations, adding more product categories, targeting more customer segments and channeling more resources to the pick-
Slide 39: Increase in Purchasing Capabilities (3)
(1) - i Growth Strategies for Second-hand Services for Individuals: Increase in Purchasing Capabilities (3) Goal is a purchasing ratio of 25% by using more people for pick-up purchases, adding more product categories and targeting more customer segments 26% 250 25% 24% 24% 200 22% 22% 150 20% 20% 18
Slide 40: Second-hand Services for Individuals: Sales Forecasts
(1) - i Growth Strategies for Second-hand Services for Individuals : Sales Forecasts The goal is average annual growth of at least 20% starting in FY6/22 by using numerous strategic initiatives (Million yen) 12,000 CAGR：23.2% 10,000 10,000 8,000 7,500 5,871 5,819 6,000 6,000 5,582 5,557 5,350 4,000
Slide 41: Machinery (Agricultural Equipment): Past Performance
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Past Performance Steady growth (Million yen) 1,200 1,061 1,000 800 697 600 415 400 234 200 37 0 FY6/17 FY6/18 FY6/19 FY6/20 FY6/21 Cross-border Domestic sales e-commerce 40
Slide 42: Machinery: Business Climate (1)
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Business Climate (1) Consistent demand for buying used agricultural equipment because of the declining number of agricultural workers in Japan and the aging population (Age) (Thousand people) Agricultural Workers in Japan and Averag
Slide 43: Machinery: Business Climate (2)
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Business Climate (2) Japan’s agricultural equipment market decreased in 2020 due to COVID-19 but is expected to recover as the Japanese government supports the increasing use of agricultural machinery (Million yen) Shipments of Agri
Slide 44: Machinery: Business Climate (3)
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Business Climate (3) The actual size of the used agricultural equipment market in Japan is estimated to be about ¥10 billion, indicating that there is still much potential for more growth. Automobiles Agricultural Equipment Annual s
Slide 45: Machinery (Agricultural Equipment): Three-year Plan
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Three-year Plan Purchases Sales • Established the Kita-Kanto purchasing base as the main location for operations in • Continue selling equipment on YAHUOKU! eastern Japan and increase sales using the marketplace of UMM Co., Ltd. (a
Slide 46: Establishment of Kita-Kanto purchasing base
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) : Establishment of Kita-Kanto purchasing base Expanded the site by about 40% to increase the capacity for buying agricultural equipment in eastern Japan and shipping equipment for cross-border e-commerce Before After establishment est
Slide 47: Machinery (Agricultural Equipment) Sales Plan
(1) - ii Growth Strategies for Machinery (Agricultural Equipment) Plan on steady growth supported mainly by cross-border e-commerce (Million yen) Machinery Sales Plan 4,000 3,500 3,000 3,000 2,500 2,000 2,000 1,500 1,500 1,061 1,000 697 500 415 234 37 0 FY6/17 FY6/18 FY6/19 FY6/20 FY6/21 FY6/22 Plan
Slide 48: Oikura Growth Stages
(1) - iii Growth Strategies for Oikura: Oikura Growth Stages (Source: FY2021 1H Financial Result Briefing) STEP 3 Current stage in June 2021 Build platform for creating the circular economy STEP 2 Higher awareness/More customer contact points Strengthen alliances STEP 1 A stronger foundation Collabo
Slide 49: Oikura New Growth Stages
(1) - iii Growth Strategies for Oikura: Oikura New Growth Stages STEP 3 Build platform for creating Current stage in June 2021 the circular economy STEP 2 Higher awareness Strengthen alliances STEP 1-2 More customer contact points A stronger customer base Improve UI/UX and back-end capabilities STEP
Slide 50: Oikura: Three Medium-term Goals
(1) - iii Growth Strategies for Oikura: Three Medium-term Goals More customer Increase in the Improve UI/UX and contact points number of merchants back-end capabilities 49
Slide 51: Oikura: More Customer Contact Points
(1) - iii Growth Strategies for Oikura: More Customer Contact Points Use many marketing activities, including the Oikura app, to increase the number of people using Oikura • Advertisements for installing the Oikura app More customer • Continue using Oikura internet advertisements contact points • Co
Slide 52: Oikura: Increase in the number of merchants
(1) - iii Growth Strategies for Oikura: Increase in the number of merchants Increase activities to add merchants with the goal of doubling the number of fee-paying stores • Use MarketEnterprise sales activities and partners to Increase in the strengthen sales activities targeting thrift stores numbe
Slide 53: Oikura: Development Plan
(1) - iii Growth Strategies for Oikura: Development Plan Strengthen UI/UX and other IT system development activities • More convenience for customers for appraisals of used items, such as by improving the User My Page • More convenience for merchants, such as by improving Improve UI/UX and the merch
Slide 54: Oikura: Long term Business Plans
(1) - iii Growth Strategies for Oikura: Long term Business Plans Build a more powerful foundation to enable Oikura to make a significant contribution to growth starting in FY6/24 (Million yen) 1,400 1,200 1,200 1,000 900 745 800 600 400 305 168 159 200 0 FY6/21 Result FY6/22 Plan FY6/23 Plan FY6/24
Slide 55: Media Business Strategies
(2) Media Business Strategies The goal is strengthening current strategic initiatives in order to establish a framework for media business that is consistently profitable (Million yen) Media Business Sales Plan 900 800 800 700 700 600 600 519 500 400 300 200 100 0 FY6/21 FY6/22 Plan FY6/23 Plan FY6/
Slide 56: Mobile & Telecom Strategies: Revise the Profit Structure
(3) Mobile & Telecommunications Business Strategies: Revise the Profit Structure Shift from one-time sales to recurring revenue to build a steadily larger base for future earnings* WiMAX2+ WiMAX 5G Sales incentive (one time): Small Sales incentive (one time): Large Subscription fee (recurring): Larg
Slide 57: Mobile & Telecom: Composition of Service Subscriptions
(3) Mobile & Telecommunications Business Strategies: Composition of Service Subscriptions The percentage of recurring-revenue 5G contracts is expected to climb as the total number of service subscriptions increases (Number of subscriptions) 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20
Slide 58: Mobile & Telecom: Business Plans
(3) Mobile & Telecommunications Business Strategies: Business Plans Anticipate a short-term decline in profits as the number of recurring-revenue 5G subscriptions increases (Million yen) (Million yen) 550 6,000 527 500 450 5,000 400 4,000 350 345 300 3,000 250 5,500 5,000 200 4,300 3,866 2,000 150 1
Slide 59: Mobile & Telecom: Future Earnings
(3) Mobile & Telecommunications Business Strategies: Future Earnings The expected steady growth of future earnings during the next three years will contribute to establishing a stable base for the operations of MarketEnterprise Group (Million yen) 1,400 1,277 1,225 1,041 1,050 527 875 345 636 700 33
Slide 60: Mid-term Performance Target
(4) Mid-term Performance Target Aim to accomplish the earnings plan through sales growth supported primarily by the second-hand online business. Also plan to build a stable profit structure by increasing the volume of future earnings. FY6/21 FY6/22 FY6/23 FY6/24 (Billion yen) CAGR (Result) (Plan) (P
Slide 61: ir@marketenterprise.co.jp
Forward-looking statements in this document, such as forecasts of business performance, include forward-looking statements, assumptions and projections that are the basis of our plans. Actual business results may differ substantially due to various factors. For IR-Related Inquiries and Inquiries abo
Slide 62: To be an Optimized Trading Company for the creation of Sustainable Society
To be an Optimized Trading Company for the creation of Sustainable Society 61