Demae-Can / 2484
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Demae-can / 2484 COVERAGE INITIATED ON: 2017.12.25 LAST UPDATE: 2021.03.01 Shared Research Inc. has produced this report by request from the company discussed herein. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, neutral analysis. To highlight any biases, we clearly attribute our data and findings. We always present opinions from company management as such. The views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg. Research Coverage Report by Shared Research Inc. Demae-can / 2484 RCoverage LAST UPDATE: 2021.03.01 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp INDEX How to read a Shared Research report: This report begins with the Trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the later Business section. Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3 Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 6 Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------ 6 Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 7 Quarterly trends and results ----------------------------------------------------------------------------------------------------------------------------------- 7 Company forecast for FY08/21 ------------------------------------------------------------------------------------------------------------------------------ 13 Historical forecast accuracy ---------------------------------------------------------------------------------------------------------------------------------- 13 Medium-term business plan --------------------------------------------------------------------------------------------------------------------------------- 14 Business ------------------------------------------------------------------------------------------------------------------------------------------------ 19 Business description -------------------------------------------------------------------------------------------------------------------------------------------- 19 Demae-can business -------------------------------------------------------------------------------------------------------------------------------------------- 20 Mail Order business -------------------------------------------------------------------------------------------------------------------------------------------- 27 Group companies ----------------------------------------------------------------------------------------------------------------------------------------------- 28 Market overview ------------------------------------------------------------------------------------------------------------------------------------------------- 29 Information on competitors ---------------------------------------------------------------------------------------------------------------------------------- 32 Strengths and weaknesses ------------------------------------------------------------------------------------------------------------------------------------ 33 Historical performance ---------------------------------------------------------------------------------------------------------------------------- 35 Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 35 Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 37 Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 39 Other information ---------------------------------------------------------------------------------------------------------------------------------- 40 ESG-related -------------------------------------------------------------------------------------------------------------------------------------------------------- 40 Shareholder returns--------------------------------------------------------------------------------------------------------------------------------------------- 40 Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 41 Major shareholders (as of August 31, 2020) ----------------------------------------------------------------------------------------------------------- 42 Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 42 Historical performance, news and topics ---------------------------------------------------------------------------------------------------- 43 Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 43 News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 61 Profile ---------------------------------------------------------------------------------------------------------------------------------------------------------------- 66 02/67 Demae-can / 2484 RCoverage LAST UPDATE: 2021.03.01 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp Executive summary Business overview ◤ Demae-can business: The company operates Demae-can, a food delivery website for restaurants. Under its Demae-can business, the company operates a dedicated online platform through which consumers looking for speedy home delivery service (in as little as 20 minutes) can order food from affiliated restaurants. The company offers an outsourced delivery platform, Sharing Delivery, for restaurants without their own delivery infrastructure. Since Q3 FY08/20, amid a tough climate for the restaurant industry due to the COVID-19 outbreak, the company has grown revenue sharply by responding to demand for delivery from restaurants and consumers (revenue was up 73.3% YoY in Q3 and 91.5% YoY in Q4). At the same time, the company incurred upfront spending, such as the expense of setting up delivery bases (Sharing Delivery bases) and advertising. In FY08/20, it reported gross merchandise volume (GMV) of JPY102.7bn (+31.0% YoY), revenue of JPY10.3bn (+54.6% YoY), and an operating loss of JPY2.6bn (an operating loss of JPY39mn in FY08/19). The Demae-can business reported revenue of JPY9.4bn (+73.8% YoY) and an operating loss of JPY2.5bn (an operating loss of JPY18mn in FY08/19). The company only operated in Japan as of FY08/20. ◤ Outsourced delivery platform (Sharing Delivery): It is moving forward with a hybrid system in which it secures delivery infrastructure by establishing delivery bases (Sharing Delivery bases) while outsourcing deliveries to companies and individuals during peak hours to suppress fixed costs. The company manages its Sharing Delivery bases directly and in partnership with other companies. It distinguishes itself with efficient, quality delivery services that set it apart from its main competitor Uber Technologies, Inc. (NYSE: UBER). The company had 384 bases as of end-FY08/20 (an increase of 169 YoY), and said it covered roughly 30% of the population. ◤ Key Performance Indicators: The company discloses three key performance indicators that it watches closely: gross merchandise volume (GMV: JPY102.7bn in FY08/20, +31.5% YoY), the number of affiliated restaurants (33,000, +65.7% YoY), and the number of active users (3.92mn, +30.7% YoY), defined as users who have made an order within the past year. The company’s strategy entails first growing the number of affiliated restaurants, resulting in higher GMV and more active users, and thereby increasing density, boosting delivery efficiency. Key indicators that the company watches closely but does not disclose include its order conversion rate (the percent of website viewers that place orders), number of orders, order unit price, and repeat order rate. ◤ Revenue: As of January 2021, in principle, pay-for-use charges for affiliated restaurants were 10% of order cost as Demae-can service fees (before tax, including points cost); 25% of order cost as delivery commissions (before tax; no charge when affiliated restaurants handle delivery); and maximum of 3% of order value as payment processing fees (before tax; for cashless payments, fees paid to credit card company). The company wants to make restaurant food deliveries an everyday occurrence, and thinks this will see the average order decline gradually from about JPY2,800 in August 2020. The company said this is due to a tendency for average order value to decline for high-frequency customers, and its plans to tap into the singles demographic