Bridge Report (4312) September 12, 2018 http://www.bridge-salon.jp/company_e 1 Bridge Report Cybernet Systems Co., Ltd. (4312) - Stock Information - Share Price Number of Shares Issued (excluding treasury shares) Total Market Cap ROE (Actual) Trading Unit ¥822 31,158,269 shares 25,612 million 6.8% 100 shares DPS (Est.) Dividend Yield (Est.) EPS (Est.) PER (Est.) BPS (Actual) PBR (Actual) ¥16.52 2.0% ¥33.02 24.9x ¥453.15 1.8x *The share price is the closing price on August 17. The number of shares issued was calculated by subtracting the treasury shares from the number of outstanding shares at the end of the latest quarter. ROE and BPS are from the last year-end. - Consolidated Earnings Trends - (Unit: Million yen) Fiscal Year Net Sales Operating Income Ordinary Income Net Income EPS (¥) DPS (¥) December 2014 (Actual) 15,396 810 974 596 19.14 13.80 December 2015 (Actual) 15,518 851 1,003 463 14.87 13.80 December 2016 (Actual) 16,031 1,027 1,001 462 14.83 13.00 December 2017 (Actual) 17,987 1,504 1,639 937 30.09 15.05 December 2018 (Forecast) 19,510 1,561 1,709 1,029 33.02 16.52 This Bridge Report presents Cybernet Systems’s first half of fiscal year December 2018 earnings results, and fiscal year December 2018 earnings estimates, etc. 1. Company Overview 2. First Half of Fiscal Year December 2018 Earnings Results 3. Fiscal Year ending December 2018 Earnings Estimates 4. Progress of Medium-Term Business Plan (2015 to 2020) 5. Conclusions President & CEO Kuniaki Tanaka Company Cybernet Systems Co., Ltd. Code No. 4312 Exchange TSE 1st Section Industry Information and communications President & CEO Kuniaki Tanaka Address FUJISOFT Bldg. 3 Kanda-neribeicho, Chiyoda-ku, Tokyo Business A subsidiary of FUJISOFT. Approximately 80% of its business is the CAE business (virtually reproducing and simulating phenomena (things, physical events) on computer for new products development). It is currently strengthening in-house products. Year-end December URL http://www.cybernet.co.jp/english/
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Bridge Report (4312) September 12, 2018 http://www.bridge-salon.jp/company_e
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Bridge Report Cybernet Systems Co., Ltd. (4312)
- Stock Information -
Share Price Number of Shares Issued
(excluding treasury shares) Total Market Cap ROE (Actual) Trading Unit
¥822 31,158,269 shares 25,612 million 6.8% 100 shares
Bridge Report (4312) September 12, 2018 http://www.bridge-salon.jp/company_e
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Key Points
1. Company Overview With “Computer Aided Engineering (CAE) Solution” and “IT Solution” as two pillars of the business, Cybernet supports the manufacturing of
goods, “Monozukuri.” CAE includes virtual designing and experimentation (simulation) on a computer. In the process of product development,
CAE helps achieve high quality, shorten the development period, and reduce development cost. It is also environmentally friendly as it reduces
waste materials generated by trial production. The Company is engaged in a license sales and maintenance service of more than 50 kinds of
globally recognized software provided by more than 10 companies as well as an agency service to approximately 2,000 companies in the fields
of automobiles, machinery, electric machinery and 500 research institutions and universities.
The Group is composed of the Company and its 13 consolidated subsidiaries. Its business is operated in North America, the UK, France,
Germany, Belgium, and Asia. Among the main consolidated subsidiaries, there are 3 development subsidiaries: Sigmetrix, L.L.C. (US), which
develops and sells tolerance analysis (the permissible range of variation in a dimension set at the time of design) software with technical support;
Waterloo Maple Inc. (Canada) for formula manipulation systems; and Noesis Solutions NV (Belgium), which develops and sells the Process
Integration and Design Optimization (PIDO) tools with technical support. The Group also has 3 distributor subsidiaries of CAE Solutions:
CYBERNET SYSTEMS (SHANGHAI) CO., LTD. (Shanghai), CYBERNET SYSTEMS TAIWAN CO., LTD. (Taiwan, 57% ownership),
and CYFEM Inc. (South Korea, 65% ownership).
· In the first half of FY 2018, sales increased 14.1% and operating income rose 18.9% year on year. There was a double
digit increase in sales for both the IT and CAE solution services. The sales of IT solution services grew 13.2% due to the
strong performance of security-related solutions, while the sales of CAE solution services rose 15.7%, mainly in the MCAE
and optical design fields. Overseas, sales grew at the Company’s subsidiary in Taiwan, and the Korean subsidiary, which
was established last year, contributed to sales growth. In addition to higher-than-expected sales, personnel expenses were
down due to a delay in recruitment, and the growth rate of operating income exceeded the estimated 13.4%.
· There is no change in the full-year forecast. Sales are expected to rise 8.5%, and operating income is estimated to increase
3.7% year on year. FY 2018 is positioned as the “period of upfront investment” and the Company will work towards
completing the medium-term management plan by focusing on investment in human resources, improving the Group
products, and developing new products. Although increases in operating income will be minimal, the Company plans to
reward shareholders by raising the total annual dividend by 1.47 yen/share. The term-end dividend is to be 8.26 yen/share,
amounting to 16.52 yen/share for the full term. The estimated payout ratio is 50.0%.
· The progress rate is steady in terms of the full-year forecast. The progress rate of sales is 55.1% (52% in the same period
of the previous term), and that of operating income is 67.1% (58%). The reason why the forecast remains the same is
because in the second quarter, there were slightly fewer new contracts for CAE than there were in the previous term. In
addition, the Company anticipates that major business negotiations at overseas subsidiaries in the fourth quarter will have
a large impact on profit. However, considering the widespread use and expansion of automotive electronics, electric cars,
and IoT, the CAE*1 market is expected to grow. Technological innovation is ongoing, which can be seen in CAE itself, as
well as MBD*2 and MBSE*3. For this reason, it is more important to determine whether or not the Company is on the right
track in terms of market growth rather than focusing on performance in the immediate future. We would like to pay attention
to progress regarding the Company’s global strategy and their strategies for each applied field and business domain.
*1 CAE (Computer Aided Engineering): Engineering support using computers
*2 MBD (Model Based Development): A design method that carries out development processes such as conception, design, and
testing, based on a mathematical model.
*3 MBSE (Model Based Systems Engineering): A development method spanning multiple technical fields such as machinery,
electrical equipment, control, and software, in which the entire development process from requirement analysis to testing is based
Bridge Report (4312) September 12, 2018 http://www.bridge-salon.jp/company_e
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The decrease in operating CF is due to an increase in trade receivables. Loans increased under investing CF, and financing CF
declined due to payment of dividends.
3. Fiscal Year Ending December 2018 Earnings Estimates
Consolidated Earnings (unit: million yen)
FY12/17 Results Component ratio FY12/18 Forecast Component ratio YoY Change
Net sales 17,987 100.0% 19,510 100.0% +8.5%
Operating income 1,504 8.4% 1,561 8.0% +3.7%
Ordinary income 1,639 9.1% 1,709 8.8% +4.2%
Net income 937 5.2% 1,029 5.3% +9.8%
There is no change in the full-year forecast. Sales and operating income are expected to rise 8.5% and 3.7%, respectively.
FY 2018 is positioned as the “period of upfront investment” and the Company will work towards completing the medium-term
management plan by focusing on investment in human resources, improving the Group’s products, and developing new products. It
is estimated that there will be an increase in personnel expenses (roughly 20 additional staff members inside and outside Japan) and
development expenses (over 100 million yen increase), as well as another 100 million yen or more to be spent for upgrading the
core system (ERP).
Sales estimates are conservative, because the higher-than-expected OEM sales in the fourth quarter of the previous term were due
to a contract that was originally scheduled for the current term but was moved up due to circumstances on the client’s end. In addition,
the Company's performance tends to be weighted in the first half, as sales are usually weaker in the third quarter (July-September).
The Company will pay interim and term-end dividends of 8.26 yen/share each, for a total annual dividend of 16.52 yen/share, an
increase of 1.47 yen/share. The payout ratio is 50%.
The Company’s basic policy for distributing profits includes determining dividends by using a payout ratio of 50% or a net asset
(shareholders' equity) dividend rate of 3.0%, whichever is higher. In order to make well-rounded decisions, they also take into
consideration the amount invested into raising corporate value over the medium-and long-term.
4. the Medium-Term Business Plan (2015 to 2020) The Company is currently implementing the medium-term business plan, which is a six-year period plan from 2015 to 2020 (first phase: 2015
to 2017, second phase: 2018 to 2020). The medium-term business plan is based on these basic strategies: “Provide value unique to Cybernet,”
“Focus on automotive field,” and “Strengthen cooperation with partners.” Target figures for the final FY2020 are consolidated net sales of 30
billion yen (15.39 billion yen in 2014) and consolidated operating income of 3 billion yen.
The company achieved over 8.0% of consolidated operating income ratio in the first phase of the plan ended in FY 2017. For the basic strategy
“Provide value unique to Cybernet,” the domestic sales of Multi-domain Solutions (to be explained later) development on which the company
focused grew from 12.7 billion yen in FY2014 to 14.6 billion yen in FY2017. With regard to “Focus on automotive field,” rate of sales in the
automobile-related field in the domestic sales grew from 12.0% in FY2014 to 16.4% in FY 2017. As for “Strengthen cooperation with partners”
aiming at the expansion of the Vendor Business, the number of sales partners increased from 81 to 123 companies (increased by 52%) and OEM
sales towards partners increased from 450 million yen to 550 million yen (increased by 23%) (since OEM sales are almost equal to the operating
income, their impact in terms of profit is huge).
【Second phase (2018 to 2020) - Rise of the top line accompanied by improvement of profitability- 】The Company is aiming at double-
digit growth and an operating income margin of 10% for the Distributor Business and Consulting Business and double-digit growth and an
operating income margin of 20% for the Vender Business. In addition to expansion of existing businesses and new businesses that began in the
first phase (2015 to 2017), the Company anticipates contributions from new businesses that will be launched in the second phase (2018 to 2020).
With respect to the existing businesses, the Company will grow from 17.3 billion yen in FY 2017 to 22.6 billion yen (average growth rate of
9.4%). With respect to the new businesses that began in the first phase, it will increase “1D CAE + 3D CAE Multi-domain Solutions,” etc. from
0.7 billion yen to 3.4 billion yen. As for the businesses that will be launched in the second phase, it will grow the “Extended Multi-domain
Solutions by MBSE (to be described later)” to the scale of 3.9 billion yen.