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J Trust Co., Ltd. (8508 TSE2) Issue Date: October 6, 2015 ANALYST NET Company Report J Trust Co., Ltd. (8508 TSE2) Issue Date: October 6, 2015 Transitioning main source of profit from domestic business to overseas businsss and turning around financial business in South Korea Independent financial group known as "JT" with prominent Basic Report position in South Korea and Southeast Asia (FY2016-3, 1st Quarter) J Trust Co., Ltd. is an independent financial group known by sponsorship to Takefuji and the acquisition of KC Card. Current core businesses are: (i) domestic SQUADD Research & Consulting, Inc. financial business centered on credit guarantee, (ii) savings bank business in South Tomoko Okuyama / Sadao Korea and (iii) commercial banking business in Indonesia J Trust may not be well Sakamoto known in Japan, but is broadly recognized as "JT" ("J TRUST") in the Southeast Asia region, particularly in South Korea and Indonesia. After TOB by Nobuyoshi Fujisawa (current CEO), it has rapidly expanded the business scale through M&A, Company Information and as a result, total assets surged from c.12.2 billion yen to c. 540.7 billion yen Name J Trust Co.,Ltd. (c.44-fold increase) and operating revenue increased rapidly from c.3.2 billion yen to c. 63.3 billion yen (about 20-fold increase) over about seven years. While it has Equity Code 8508 accumulated assets primarily through M&A in Japan over several years after TOB, it Market Section TSE's 2nd Section has looked into tie-up with banks in the domestic business (credit guarantee, etc.) Location Toranomon, Minato-ku, Tokyo from the early stage, and promoted M&A strategies under the mid- to long-term President Nobuyoshi Fujisawa vision to develop retail banking business in Asia. From FY2016, a shift of focus from Foundation Date 1977/3/18 the domestic business to financial businesses in South Korea and Southeast Asia has Capital 53,611 mil yen become apparent, and in the near term, these two business segments will drive the Listed Date Sep-1998 overall growth. URL http://www.jt-corp.co.jp/en/ Surplus in Indonesian business and accumulation of loans in Industry Financials ＞Other Financing Business South Korea is primary task Accounting Period March Key Indicators Operating revenue of 19.5 billion yen in Q1 FY2016 (up c.22% year-on-year), As of 2015/9/25 achieving 24% of this fiscal year’s target was a reasonable start. Operating income Stock Price 1,001 yen lagged at deficit of c.1.9 billion yen, caused by additional provision of allowance Yearly High 1,335 yen (2015/5/26) for doubtful accounts (1.9 billion yen) at Bank JTrust Indonesia which was Yearly Low 890 yen (2015/8/25) reflected in this quarter due to a delay in voluntary adoption of IFRS. However, given the background that Bank JTrust Indonesia used to be a failed bank, there are Shares Outstanding 118,667,754 Stock many challenges in its earning structure, and restructuring of business is now Unit of Trading 100 Stock rapidly under way. Market Cap 118,786 mil yen Dividend (Est) 12.00 yen (FY2016/3) Domestic financial business scaled down but remained in surplus, though contracted, as guarantee for rental housing loans, etc. showed a steady growth. Div-Yield (Est) 1.20 % (FY2016/3) Financial business in South Korea achieved surplus in this quarter, and both EPS (Est) 39.77 yen (FY2016/3) revenue and income are expected to increase for the full year driven by EPS (Act) 85.92 yen (FY2015/3) accumulation of loans. Considering that the financial business in South Korea has PER (Est) 25.17 times (FY2016/3) completed transition to profitable structure but from the mid- to long-term PBR (Act) 0.64 times (FY2015/6) viewpoint, to what extent it can expand the loan balance and gain the market share will decide the future of the South Korean business. ◆Business Overview (mil yen) Operating Operating Operating Ordinary Ordinary income Net FY y/y Net margin EBITDA EPS （yen ） revenue income profit ratio income Margin income Mar-14 Actual 61,926 111.2% 13,745 22.2% 13,351 21.6% 11,145 18.0% 17,376 109.66 Mar-15 Actual 63,281 102.2% (5,217) -8.2% (2,385) -3.8% 10,143 16.0% (926) 85.92 Mar-16 Company Est. 81,900 - 7,500 9.2% n.a. n.a. 4,700 5.7% n.a. 39.77 Operating Operating Operating Ordinary Ordinary income Net Cumulative y/y Net margin EBITDA EPS （yen ） revenue income profit ratio income Margin income 2015/3-1Q Actual 15,928 109.5% (358) -2.2% (294) -1.8% (395) -2.5% n.a. n.a. 2016/3-1Q Actual 19,490 122.4% (1,951) -10.0% (1,585) -8.1% (2,789) -14.3% n.a. n.a. 2016/3-1Q Progress Rate 23.8% n.a. - n.a. n.a. n.a. - n.a. n.a. n.a. Since voluntary adoption of IFRS is scheduled from FY2016-3, the company estimates are projected figures based on IFRS. 1/66 This report is prepared by SQUADD Research & Consulting Inc. ("SQUADD") for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information and materials that SQUADD judged reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. SQUADD shall not take any responsibility whatsoever for any results including direct or indirect damage arising from the use of, or reliance to, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property right of this report belongs to SQUADD, and any copy, transmission or quote of any contents without permission is legally prohibited. J Trust Co., Ltd. (8508 TSE2) Issue Date: October 6, 2015 Brief Investor Summary 2/66 This report is prepared by SQUADD Research & Consulting Inc. ("SQUADD") for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information and materials that SQUADD judged reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. SQUADD shall not take any responsibility whatsoever for any results including direct or indirect damage arising from the use of, or reliance to, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property right of this report belongs to SQUADD, and any copy, transmission or quote of any contents without permission is legally prohibited. J Trust Co., Ltd. (8508 TSE2) Issue Date: October 6, 2015 Index 1 Business Overview 6 Financial Analysis (1) Long-term Trend P4 (1) Cost Overview P46 (2) Segment Composition P4 (2) BS Overview P49 2 Company Overview (3) Cash Flow Overview P53 (1) History P8 7 Business Plan, Growth Strategy and (2) M&A Activities P9 SWOT Analysis (3) Topics Since April 2015 P13 (1) Business Pan and Growth P55 (4) Ownership/Capital Policy P14 Strategy (5) Executives Status P16 (2) SWOT Analysis and Risk P58 Factors (6) Employees Status P18 8 Competitive Environment 3 Performance Highlight (1) Domestic Credit Guarantee P60 (1) Consolidated Performance P19 Highlight (annual) (2) South Korean Savings Bank P61 (2) Recent Quarter Overview P21 (3) Indonesian Bank P62 9 Stock Price Trend and Investment 4 Market Environment Return Analysis (1) South Korea: Type of Financial P22 (1) Stock Price Trend P63 Institutions (2) South Korea: Trend of Credit to P23 (2) Investment Return Analysis P63 Households (3) Return to Shareholders & P65 (3) South Korea: Industry P25 Dividend Policy Reorganization Trend 5 Segment Overview and Business Model (1) Domestic Financial Business a. Outline P25 b. Performance Trend (annual) P29 c. Recent Quarter Performance P33 (2) International Financial Business a. Financial Business in South P34 Korea Outline b. Financial Business in P37 Southeast Asia Outline c. Performance Trend (annual) P39 d. Recent Quarter Performance P41 (3) Non-Financial Business a. General Entertainment P44 Business b. Real Estate Business P45 3/66 This report is prepared by SQUADD Research & Consulting Inc. ("SQUADD") for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information and materials that SQUADD judged reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. SQUADD shall not take any responsibility whatsoever for any results including direct or indirect damage arising from the use of, or reliance to, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property right of this report belongs to SQUADD, and any copy, transmission or quote of any contents without permission is legally prohibited. J Trust Co., Ltd. (8508 TSE2) Issue Date: October 6, 2015 1. Business Overview ◆ Rapidly expanded business through proactive M&A since TOB by 1-(1) Long-term Nobuyoshi Fujisawa in March 2008 Trend J Trust Co., Ltd. is an independent financial group, carrying out credit guarantee business and receivable collection business, etc. in Japan, as well as banking business in Rapid business expansion South Korea and other Asian region. through proactive M&A Ikko Corporation (formerly Ikko Shoji Co., Ltd.), a predecessor of J Trust, started B since TOB by Fujisawa in to B financial business (moneylending services such as discount on commercial notes 2008 and loan on notes) in 1977 in Osaka, smoothly expanded the business, and listed its stocks at the 2nd Section of the Osaka Stock Exchange in 1998. However, business conditions have deteriorated due to prevailing issues surrounding small business loans in 2000 and lowering of the maximum lending interest rate along with revisions of the Money Lending Business Act in 2006.
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