BRIDGE REPORT
(6184)

東証1部

Kamakura Shinsho, Ltd. (6184)
Chairman Hirotaka Shimizu
Chairman
Hirotaka Shimizu
President Takahito Aiki
President
Takahito Aiki
 
Corporate Profile
Company
Kamakura Shinsho, Ltd.
Code No.
6184
Exchange
TSE 1st Section
Chairman
Hirotaka Shimizu
President
Takahito Aiki
Address
7F, Yaesu Center Bldg., 1-6-6, Yaesu, Chuo-ku, Tokyo
Year-end
January
URL
Stock Information
Share price Number of shares issued
(excluding treasury shares)
Total market cap ROE (Actual) Trading Unit
¥1,250 37,149,424 shares ¥46,437 million 11.5% 100 shares
DPS (Est.) Dividend yield (Est.) EPS (Est.) PER (Est.) BPS (Actual) PBR (Actual)
- - ¥9.30 134.4 times ¥242.14 5.2 times
* Stock price as of the close on September 13, 2018. The number of shares issued is obtained by deducting the number of treasury stocks from the number of shares issued at the end of the latest quarter. ROE and BPS are taken from the previous term's results.
 
Non-Consolidated Earnings Trend
Settlement period Sales Operating
profit
Recurring
profit
Net
income
EPS DPS
Jan. 2015 (Actual) 917 12 27 10 1.49 -
Jan. 2016 (Actual) 1,147 225 211 125 4.35 -
Jan. 2017 (Actual) 1,332 327 324 206 6.34 -
Jan. 2018 (Actual) 1,709 405 360 254 7.23 6.00
Jan 2019 (Est.) 2,200 520 510 340 9.30 -
Jan 2020 (Plan) 2,700 700 690 460 12.38 -
* The forecasted values were provided by the company. It undertook a 1:200 stock split in August 2015, a 1:4 stock split in October 2016, and a 1:4 stock split in September 2018 (EPS revised retroactively)
* Consolidated accounting from the term ending Jan. 2019. From this term, net income means the profit attributable to owners of parent. Hereinafter the same applies.

We will present the outline of Kamakura Shinsho's settlement of accounts for the first half of fiscal year (FY) ending January 2019, forecasts and initiatives for FY ending January 2019 and 2020 in this Bridge Report.
 
Key Points
 
 
 
Company Overview
Based on the concept of "helping people connect with other people," the company is pursuing business development focusing on the end-of-life market. The end-of-life market is a market related to preparation for after-death, funeral, altar, grave and reconstruction of the lives of the bereaved families. The company operates portal websites including "Good Funeral," a site to provide information about funeral homes, funeral halls and crematorium, "Good Grave," a site to provide cemetery and tombstone stores, and "Good Altar," a site to provide information about stores for Buddhist altar and its fittings. Furthermore, it is engaged in production and sales of monthly "Butsuji," which is the only business magazine for the memorial service industry, and books related to the end of life. 【Corporate Philosophy】 The corporate philosophy is "We contribute toward the creation of a bountiful society by helping to provide settings that engender a sense of thankfulness for interpersonal connections." Under the idea that the exchange of "kindness" and "thankfulness" is the foundation for forming a rich society, Kamakura Shinsho wants to exist to increase the moment of feeling "thankfulness" in various stages of life in the society. 【Corporate History】 In April 1984, it was established with the aim to publish books for the Buddhist altar and its fittings industry. However, when Mr. Hirotaka Shimizu assumed the representative director of the company, he redefined the corporate strategy by stating that "the value we provide is `information'" under the idea that "People who buy books are not seeking printed materials but looking for information that is written in books." From the viewpoint of the information processing industry, the company launched a website "Good Funeral" that provides information concerning the funeral companies nationwide, funeral manners etc. in October 2000, as a new business field being "an information business including Internet business". 【Business Description】 The company's businesses are divided into the Web Services Business focusing on management of portal websites, including matching platform for graves, funerals, Buddhist altar and its fixtures, and the Publications, Others Business for planning, production, and sales of books concerning the end of life and holding seminars. In FY ended January 2018, the sales composition ratio was 89% for the Web Services Business (86% in FY ended January 2017) and 11% for the Publications, Others Business (14% in FY ended January 2017). Web Services Business The company disseminates information on services and products through portal websites covering the entire end-of-life fields including preparation for death, funeral, altar, grave, and inheritance. It also supports website users' decision making by responding to inquiries and providing consultation at the customer center. Meanwhile, the company provides sales support services and introduces prospective customers to business operators of funeral companies, stores of Buddhist altar and its fittings, tombstone stores, and temples and cemeteries that are on the company's websites. The website users receive services for free. The company receives a contract payment when the contract is settled between the prospective customer whom the company introduced and the business operator (about 10 to 20% of the contracted amount). It is a friendly system to the business operators, because it can be considered as "deferred advertisement expenditure." The competitors in the industry include, as for the funeral services, AEON LIFE Co., Ltd., a leading distribution company, and UNIQUEST ONLINE INC. which operates "Small Funeral" and "Funeral book.com." As for tombstone, there are Metropolitan stone cooperatives that operate "Moshimo.dot.net," Ohnoya of Memorial Art, and Nihon Butsuji Net. The scale of the market is 1.4 trillion yen for the funeral market and 163.9 billion yen for the market of Buddhist altar and its fittings. Key Performance Indicators = Compensation when a contract is settled: Introductions × closing rate × Unit price × Commission rate To increase compensation, the company has been making efforts to increase the introductions and improve the closing rate, and as a result, it is hoping to lead the market share expansion to raise the commission rate. To increase the introductions, it is necessary to enhance contents, improve leads, improve designs, and use advertisements. To improve the closing rate, it is necessary to strengthen communication with the website users and strengthen collaboration with the business operators. Publications, Others Business The company issues various publications related to memorial services such as funerals, graves and altars by monthly "Butsuji" (annual subscription fee: 16,200 yen including tax), which is a business information magazine for business operators in the memorial service industry. Name recognition, trustworthiness, industry network, and content creation power as a publisher are also utilized for Internet services. It is a business with synergies that cannot be measured by sales or profit.
 
 
First half of Fiscal Year ending January 2019 Earnings Result
Sales and operating profit grew 32.9% and 29.9%, respectively, from the non-consolidated results in the same period of the previous year. Sales were 1,074 million yen, up 32.9% from the non-consolidated sales in the same period of the previous year. The sales of online services increased 39% year on year to 1,002 million yen. The sales of the funeral and Buddhist altar businesses rose over 60%. Especially, the funeral business witnessed the increase in sales growth rate in 2Q, because the number of affiliated funeral homes increased. The sales of the grave business increased 27% year on year, although the number of prospective customers declined in the second quarter due to the drop in the number of visitors in the searing summer and the errors in the renewal of back-end systems, etc. Operating profit was 252 million yen, up 29.9% from the non-consolidated operating profit in the same period of the previous year. Gross profit rate rose 4.0 points, due to the improvement in KPIs (No. of introductions, contract conclusion rate, and average spending per customer). Sales growth absorbed the augmentation of SGA, which reflects the expansion of business, including an expenditure of 38 million yen for establishing two subsidiaries. Excluding this expenditure of 38 million yen, non-consolidated operating profit increased 49.8% to 291 million yen. As there were no longer costs for market change, non-operating profit and loss improved, and recurring profit rose 47.9% year on year to 237 million yen. In the second quarter (May-Jul.), sales grew 23% year on year. The number of introductions increased 16% year on year, and average spending per customer rose 5% year on year. Compared with the first quarter, the number of introductions fell below that in the first quarter (up 34% year on year) due to temporary factors, but contract conclusion rate improved considerably, and sales grew 16%. The company beefed up its back-end system for coping with the heavy load on the website from the mid/long-term perspective. Errors occurred when it was booted up, but they were corrected in a short period of time, and the system is now healthily in operation. The company strived to improve the service of escorting prospective customers who have requested a brochure to graveyards, enhance word of mouth, introduce tombstone shops that can flexibly meet customers' requests, and so on. These efforts paid off, leading to the increase of introductions and contract conclusion rate. As for the guide at graveyards, the company had introduced the service of guiding customers around graveyards after sending brochures to those who have requested them, but it started introducing that service when receiving a request for a brochure. The company considers that a contract conclusion rate of 15-16% is normal, so there is a possibility that it will subside in the third quarter or later. In the second quarter (May to Jul.), sales grew 66% year on year. The number of introductions increased 47% year on year, and average spending per customer rose 26% year on year. In rural areas, etc., the company was sometimes unable to introduce funeral halls due to geographical factors, the insufficiency of capacity, etc. and lost some opportunities. Therefore, the company established a dedicated organization to enhance efforts to find funeral halls. These efforts paid off, and the number of available funeral halls increased from about 3,200 at the end of the previous term to 4,326 at the end of the first half (the company aims to increase it to 5,000 by the end of this year). Then, the number of introductions skyrocketed, partially thanks to the renewal of the website. Since funerals have seasonality, the number of introductions in the second quarter often falls below that in the first quarter, but in the second quarter, access count increased 40% and the number of introductions was 7% larger than that in the first quarter, as the website was renewed (increasing speed by 30-50%) and the company strengthened its content marketing and SEO measures. The increase in average spending per customer is attributable to the fact that the company approached the mutual aid society, whose average spending per customer is relatively high, and the number of introductions to the mutual aid society increased, the increase of introductions by monks, the increase of option use, etc. In the second quarter (May to Jul.), sales rose 62% year on year. The number of introductions increased 33% year on year, and average spending per customer rose 16% year on year. While further search engine optimization increased visitors to their website and the efforts to enhance word of mouth, etc. produced good results, the collaborative campaign with Buddhist altar shops, which are their business partners, including the distribution of coupons for the first bon ritual, were effective. Furthermore, the rationalization of online marketing cost progressed, and cost per acquisition (CPA: advertising cost per conversion) declined 45% between Jan. and Jul. The total assets as of the end of the first half was 2,623 million yen, up 161 million yen from the non-consolidated one as of the end of the previous term. In the debit side, trade receivables increased due to the sales growth in the second quarter, and intangible assets grew due to the renewal of the back-end system. In the credit side, net assets rose. The equity ratio is 88.7%. While operating CF dropped due to the rise in trade receivables in the first half thanks to sales growth, the deficit of investing CF expanded due to the investment in systems.
 
 
Fiscal Year ending January 2019 Earnings Estimates
The full-year forecast unchanged, conservative There is no revision to the full-year earnings forecast. Sales are estimated to be 2.2 billion yen, up 28.7% from the non-consolidated sales in the previous term, and operating profit is projected to be 520 million yen, up 28.4% from the non-consolidated operating profit in the previous term. The sales and profit in the first half exceeded the in-company estimates considerably, but the forecast has not been revised, because there is a possibility that they will accelerate investment for growth and it is still difficult to forecast results accurately. On Sep. 1, 2018, the company carried out a 4-for-1 share split for the purpose of boosting the liquidity of shares and increasing investors by decreasing a trading lot of shares.
 
 
Earnings Estimates and Activities for Fiscal Year ending January 2020
While continuing the investment for growth, the company will strive to increase the sales and profit from WEB services, and strengthen other services, including the development of new businesses. In the term ending Jan. 2020, the company aims to achieve an operating profit of 700 million yen, exceeding the amount 650 million yen for satisfying the requirement for exercising paid stock options issued in Jun. 2017, and all of staff of the company will join hands to grow their company. 【Goals and path】 Until now, the company has been trying to provide "web and phone services through which seniors and their families can compare various memorial services and identify the one they need." The company aims to deepen and evolve this objective to provide the services based on the concept: "with a deeper understanding than anyone else of what seniors and their families need, we will listen carefully and work closely with them to provide services that resolve issues and enable them to do what they want to and feel they must do." The company will evolve introductions of potential customers for memorial services to achieve a scalable business model with overwhelming data and membership base of seniors and their families. 【Action policies of growth】 The company will take actions for its growth in four steps. As the first step, in the three mainstay businesses, it will focus on enhancing convenience of the service users, easing their concerns, and strengthening the web-based business and marketing etc. which are the weakness of the service partners (i.e. funeral companies, Buddhist altar shops, tombstone shops) in order to realize high growth and high market share. As the second step, it will thoroughly strengthen capabilities to know and understand the service users and address their issues. It is currently in the second step and has already been taking actions. In the third step, it will create an ecosystem to provide the best services to seniors and their families (building a service platform). For this purpose, it will appropriately carry out investment and M&A. In the fourth step, in parallel with the growth of the company, it aims to become a company that is respected by addressing social issues in the senior market, etc. The 1st Step Focus on maintaining customer convenience and eliminating anxiety and strengthening areas outside of service partner expertise in our three main businesses, realizing high growth and high market share Strategies by business In each business, the company will have the "clear ideal image," establish new measures, and strengthen the foundation of the three projects across the board. In the graves business for which the company is already leading the on-line industry, it will try to implement the "strategies to be overwhelming No. 1." During the current fiscal year, it will start a new type of "grave service" (details will be announced later) and launch advertisement using mass-media to get publicity about high-quality services and the largest number of registered stores in Japan, while emphasizing cost effectiveness. For the funerals business, it will implement the "No.1 platform strategies." In addition to obtaining the top customer satisfaction (completed), it aims to obtain the highest number of reviews (completed) and the highest number of funeral halls (partnership). In order to attract more customers and increase customer conversions, renewal of the websites will also be carried out several times from March to June. In the Buddhist altars business, based on the fact that the business environment of the Buddhist altar stores has become increasingly severe and the awareness of advertising effectiveness is rising, the company promotes the "Only One Strategy" and aims for becoming the channel to be chosen by the Buddhist altar stores. For this reason, it will strengthen the products. Specifically, the company make the coupons, enrich an introduction of products, instead of just introducing Buddhist alter shops, and enable product comparisons. It will also make efforts to enhance the store visit rate and closing rate. Business cross-cutting strategies Along with the above-mentioned business-specific strategies, it will also implement cross-cutting measures to maximize productivity. It will place a person who supervises three businesses, and, while maintaining the independence of each business, it will instrument KPI management, numerical management for each client, horizontal development of success cases, regional strengthening, strengthening of SEO and marketing measures, and consolidation of the customer center function across three businesses. Strengthening the business foundation In addition to strengthening development capabilities and technology to respond to increased access and improving convenience, it will also make efforts to improve brand value and strengthen customer (users of the company's services) capabilities. To improve the brand value, it will continue to work on strengthening media relations and publicity, which the company has been worked on from the previous fiscal year. It will also launch mass-media advertisement while emphasizing cost-effectiveness. To strengthen customer capabilities, it will build a member base and enhance the function of the call center, which is a point of contact with customers. It will also strengthen analytical capabilities of markets and customers by specialized teams. The 2nd Step Thoroughly strengthen our ability to know and understand customers and resolve issues The points are: (1) Establish superior advantages other companies cannot imitate with story business (Farewell party business), (2) Increase direct contact (voice, face, heart) with customers, (3) Create knowledge and data platform based on customer information, and (4) Cultivate and attract end-of-life market professionals. In FY ending January 2019, for (1), the company will work on increasing the tailored farewell parties which can be done from a membership fee of 5,000 yen. This effort began in FY ended January 2017 (Sales were 8 million yen in FY January 2017 → 50 million yen in FY January 2018) . Farewell parties are common among celebrities, etc., but the company will expand the business to include a wider range of public, offering affordable membership fees while maintaining quality. For (2), in order to grasp the true demands of the service users, the company summarized the call center functions of the three businesses and established the CS division. It will make efforts to lead this initiative to a successful result. For (3), it will construct and introduce data (service user information) analysis base to realize prompt decision making and marketing activities. For (4), in order to deepen the understanding of the market, it will strengthen in-house research efforts including evolution of the monthly "Butsuji" which is a business information magazine for business operators of the memorial service industry and release it. It will also work on the implementation of roundtable talks. The 3rd Step Cultivate and engage in business to create an ecosystem for providing seniors and their families with the highest level of service Currently, the company provides memorial service-related services. Through these services, it will capture bereaved families, etc. and develop demand for active senior services, services for people who need essential support or care, and services for people who need nursing care. In addition, it will organize the users of these services as members under a community platform. The company is intending to expand the businesses by implementing investment and M&A. Their businesses can make use of the strengths of the Internet, and quick recovery of investment can be anticipated. Furthermore, because it is difficult to approach seniors only through the Internet, it may also consider person-to-person approaches. However, it will not target businesses that require large-scale investments in assets, stocks, personnel etc. It will strengthen customer contacts by nurturing businesses that require only a small amount of upfront investment and bring profit at an early stage and create an ecosystem for seniors and their families. As part of this effort, it already launched a pet sitting business and a computer schools business. Pet Sitting Business The company made a minority investment in Care Pets Co., Ltd., which operates a franchise business for pet sitter services including the pets in need of care and nursing. About half of the users are 65 years old and over, and about half of the users use the service more than 30 times a month. Kamakura Shinsho will establish a 100% subsidiary and will provide services as franchisees in Setagaya-ku, Suginami-ku and Nerima-ku in Tokyo. Computer Schools Business It will establish a joint venture with Japan Itskill Co., Ltd. and operate computer training classes, "Minna no Pasokon Kurabu." Its purposes are not only to enhance computer skills of the participants but also to form communities using computers. The company is planning to use empty spaces of the specific post office buildings and shopping malls for the classes. The 4th Step Become a respected company by tackling challenges faced by society The company aims to become an excellent company that has growth potential/profitability and social contribution/social nature by implementing awareness activities of seniors and their families through the end-of-life seminars, publishing "Social Contribution Organization Guidebook" (comparative information of social contribution organizations), and strengthening cooperation with "Tsunagu Inochi Foundation." Furthermore, to achieve the goal, it will implement activities such as self-realization of seniors and work on social issues related to deceased people leaving no one to attend to their graves, lonely death, seniors in poverty, seniors providing nursing care of seniors, leaving jobs to provide nursing care to a family member, euthanasia and dignity death.
 
 
Conclusions
In the first half, visitors to the website of each business increased considerably thanks to further search engine optimization. Especially, the number of visitors to the website of the funeral business rose 21% between Jan. and Jul. While the access to the website increased, the word of mouth regarding each business spread significantly, and the word-of-mouth count for the grave business reached 10,702, exceeding 10,000 for the first time, and the word-of-mouth count for the funeral and Buddhist altar businesses was nearly 20,000. In addition, the number of introductions and contract conclusion rate increased, as the guide in graveyards was improved in the grave business, more funeral halls were found in funeral business, and some measures such as the collaborative campaign with business partners in the Buddhist altar business produced favorable results. As all measures produced better results than expected, the company became cautious, and did not revise its full-year earnings forecast, which is conservative. Kamakura Shinsho aims to become an entity that not merely provides information, but also supports a prosperous life, under the supervision of President Aiki, who believes that it is necessary to understand what elderly people and their family members really need more deeply than anyone else, listen to "what they want to do," "what they think to do," and "their troubles," stand by them, and offer services to solve troubles together. Accordingly, the company will offer a variety of services demanded by elderly people and their family members in an understandable, beneficial way in the field of "life ending," etc. and tackle social issues proactively. In Japan, where the population is aging at an unparalleled rate, the company aims to become a role model by offering the most innovative service to seniors and their family members. We would like to expect good results from their efforts.
 
 
 
<Reference: Regarding corporate governance>
◎ Corporate Governance ReportUpdated on Apr. 20, 2018 Basic approaches The company recognizes that establishing corporate governance is indispensable to improve corporate value, maximize shareholder profits, and build good relationships with stakeholders. Specifically, it believes that it is important for the President and directors who have been entrusted with management of the company to discipline themselves, make appropriate management decisions based on their responsibilities, pursue profits through its businesses, secure soundness and improve its reliability, actively disclose information to fulfill accountability, and build an effective internal control system. <Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)> 【Principle 3-1 Enrichment of information disclosure】 (1) Our company's goals (corporate ethos, etc.), management strategies, and plans Our corporate ethos is disclosed in our website. Please refer to it. http://www.kamakura-net.co.jp/company/principle.html (2) Basic mindset and policy regarding corporate governance based on the principles for this code Our company's basic mindset and policy for corporate governance are mentioned in our website. Please refer to it. http://www.kamakura-net.co.jp/ir/governance/index.html (3) The board of directors' policy and procedures for determining the remuneration or each director Basically, the remunerations of directors are fixed and paid on a monthly basis. Their amounts are determined through the approval at a meeting of the board of directors, involving independent outside directors, within the remuneration range adopted at a general meeting of shareholders, in accordance with the regulations for the board of directors. (4) The board of directors' policy and procedures for nominating candidate directors When nominating directors, comprehensive discussions are made while considering their ability to make a decision appropriately and swiftly and the right person in the right position, and approval is given at a meeting of the board of directors, involving independent outside directors. (5) Explanation on the selection and nomination of individual candidate directors by the board of directors based on the above policy and procedures described in (4) For the reason for the nomination of candidate directors, please refer to the reference material for a general meeting of shareholders mentioned in the convocation notice for the general meeting of shareholders. 【Principle 5-1 Policy for constructive dialogue with shareholders】 At the company, the executive officer responsible for the management department supervises the departments related to IR activities such as Business planning department, Accounting finance department, etc. and develops the IR system. Furthermore, the company carries out dialogues (interviews) at the request of shareholders and investors. It also holds an explanatory meeting for settlement of accounts every six months for investors, and the President himself provides explanations. TSE Corporate Governance Information Service:http://www2.tse.or.jp/tseHpFront/CGK010010Action.do?Show=Show
 
Disclaimer
This report is intended solely for informational purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the company, and comes from sources that we judge to be reliable. However, we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.

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