RIDE on EXPRESS Co.,Ltd
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RIDE ON EXPRESS Co.,Ltd. Top share in delivery of sushi (Gin no Sara) and other rice dishes; leading position in on-demand delivery TICKER: 6082| TSE1| website: http://www.rideonexpress.co.jp/ | LAST UPDATE: 2016.06.28 Business Strengths and weaknesses Delivers sushi and kamameshi; express delivery for partner restaurants Strengths Business model: The company prepares sushi or kamameshi (traditional Japanese Nationwide on-demand delivery network: pilaf) and delivers to customers by motorbike. Delivering does not require prime The company has a nationwide network to locations, so stores are located on the ground floor of apartment buildings in generate profits despite the effort and cost second- and third-tier areas. Total of 20–30 staff per store. Stores take orders, of delivery prepare food, and arrange deliveries. 371 locations nationwide (86 directly managed, 285 franchises). Each store secures a market of at least 50,000 Leading share in sushi and kamameshi households within a 30 minute delivery radius, and operates several brands. delivery: 46% and 85% market share, Multibrand strategy aims to boost sales and cover fixed costs. Key sushi brand is respectively, in 2014. High share enables Gin no Sara, with secondary brands of Sushi Joto! and Kamatora (kamameshi). In scale economies in ingredient procurement the fineDine business, the company operates orders, pick-up, and delivery of Data mining: Customer and sales data from meals for 724 partner restaurants (data above as of end FY03/16). orders and surveys are stored, analyzed, Top share in sushi, kamameshi delivery: According to Fuji Keizai, the company and used via internal systems had a leading share in the markets for sushi (46% of the JPY57.1bn market in Weaknesses 2014) and kamameshi (85% of the JPY4.6bn market) delivery. Delivery staff wages drag on margin Leading position in on-demand delivery: Starting in the US, consumer improvement: A barrier to entry but also a demand for on-demand products and services is growing. The company has weakness in the business model (SG&A established on-demand delivery using motorbikes, which it has rolled out expense to sales ratio is around 40%, half of nationwide. which is personnel) Earnings Small size: Given the aim to become a mainstay on-demand service platform via Sales and profit growth since FY03/11 alliances, small scale means lack of FY03/16 results: Sales were JPY17.3bn (+0.6% YoY), operating profit JPY1.2bn negotiating power (+13.3%), recurring profit JPY1.2bn (+12.5%), and net income, JPY673mn Few partner restaurants: Compared with (+20.5%). All items except net income exceeded company forecasts. Sales of new delivery operator Demae-can (13,018 products such as chu-toro (tuna belly) of bluefin tuna topped company forecasts. affiliate restaurants) Ride on Express’s Improved yields and productivity boosted GPM. contracted delivery business fineDine only FY03/17 company forecast: Sales, JPY17.8bn (+2.5% YoY), operating profit has 285 partner restaurants JPY1.2bn (+2.2%), recurring profit JPY1.2bn (+4.9%), and net income, JPY745mn (+10.7%). The company plans to boost sales and profits by adding more Profit growth drivers region-specific menus at Gin no Sara, and opening new stores and revamping Currently: delivery of sushi and kamameshi promotions at Sushi Joto!. Medium term: on-demand delivery Medium-term strategy Index Multibrand strategy centered on Gin no Sara; becoming an express delivery platform Market capitalization JPY12.9bn Stock price (2016/6/28) JPY1,249 Ride on Express does not release medium-term forecasts. Its aim is to grow Issued shares 10,320,000 shares existing brands and Sushi Joto! and fineDine to develop a multibrand strategy. In Foreign stockholding ratio 15.38% BPS (FY03/16) JPY371.55 fineDine, where it handles deliveries for partner restaurants, the company intends PBR (FY03/16) 3.36x to handle all orders at a single control center. As major companies race to the top PER (FY03/17 planned) 17.3x Dividend (FY03/17 planned) 10.00 of the on-demand delivery market, Ride on Express aims to enter alliances Dividend payout (FY03/17 planned) 0.80% leveraging its established industry position. The goal is to become a key platform ROE (03/17 planned) 19.4% Net debt/equity ratio (FY03/16) -79.0% service company, enabling consumers to receive products almost immediately Note: after stock splits, issued shares include treasury after deciding to order. shares Source: Shared Research based on company data Trends and results Sales YoY Operating profit YoY Recurring profit YoY Net income YoY EPS BPS ROA ROE (JPYmn) (%) (JPYmn) (%) (JPYmn) (%) (JPYmn) (%) (yen) (yen) (%) (%) FY03/10 12,160 -4.1% na nm 351 55.2% -66 nm -10.08 85.70 9.8% na FY03/11 12,867 5.8% na nm 253 -28.1% 51 nm 8.03 92.51 8.2% na FY03/12 14,684 14.1% 347 na 336 32.7% 72 41.4% 11.21 105.90 8.2% na FY03/13 16,133 9.9% 542 56.3% 533 58.9% 230 220.5% 34.59 142.96 12.2% -41.2% FY03/14 16,471 2.1% 917 69.2% 911 70.9% 504 119.0% 59.81 266.74 18.5% -23.4% FY03/15 17,247 4.7% 1,072 16.8% 1,050 15.3% 558 10.7% 58.76 317.96 17.7% 42.2% FY03/16 17,346 0.6% 1,214 13.3% 1,181 12.5% 673 20.5% 66.17 371.55 18.0% 36.1% FY03/17 Est. 17,787 2.5% 1,240 2.2% 1,239 4.9% 745 10.7% 72.22 - - - Source: Shared Research based on company data Note: Amounts below JPY1mn rounded off (rounded down in company data) 01 /16 RIDE ON EXPRESS 6082 Research Espresso by Shared Research | | Business Delivers sushi and other rice dishes; express delivery for partner restaurants Company overview Delivery company handling sushi and kamameshi delivery (through directly owned and Food delivery company: delivers proprietary dishes and meals from partner restaurants franchise stores) and contracted delivery (meals from partner restaurants). Ride on Express had the leading share in the sushi and kamameshi delivery markets: 46% for sushi (JPY57.1bn market in 2014) and 85% for kamameshi (JPY4.6bn) according to Fuji Keizai. The group includes Ride on Express, consolidated subsidiary Ride on aSTART No. 1 Investment Limited Partnership, and non-consolidated company aSTART Co., Ltd. Sales and profits have been on an uptrend since FY03/11. Market size for sushi and kamameshi delivery, and Ride on Express market share Others 4.3% Company B 5.0% Company A 5.9% Others 29.7% Home delivery Home delivery The The sushi market kamameshi company (2014) company 45.9% market (2014) 84.8% JtY57.1bn JtY4.6bn Company F 1.7% Company E 2.6% Company D 3.1% Company C 3.7% Company B 6.0% Company A 7.4% Source: Shared Research based on company data (Fuji Keizai survey) Ride on Express: sales, recurring profit, RPM Source: Shared Research based on company data Amounts below JPY1mn rounded off Background to establishment and nationwide rollout The company was started in 1992 as a sandwich shop called Submarine in Gifu city, Gifu Started in 1992 as a sandwich shop called Prefecture by current president and CEO Akira Emi and current vice president and COO Submarine. Formed joint venture with Kazuyuki Matsushima. They entered sushi delivery business in 1998, and started acquiring Venture Link (now C&I Holdings; currently no franchises primarily in the Nagoya region, acquiring current sushi delivery trademark Gin capital or business relationship) to roll out franchises nationwide no Sara in 2000. In July 2001, Restaurant Express (name changed to Ride on Express in April 2013) was established as a joint venture with Venture Link (currently C&I Holdings) to roll out Gin no Sara franchises nationwide. (Currently no capital or business relationship with Venture Link). The company listed on TSE Mothers in May 2013 and transferred to TSE First Section in November 2015. Business model The company mainly operates in the sushi delivery market, which accounts for around Using the same stores, personnel, and 3.5% (JPY57.1bn) of the JPY1.7tn sushi market in Japan. (According to Fuji Keizai, the 2014 delivery infrastructure, the company delivers sushi market breakdown was à la carte sushi restaurants: JPY966.7bn, conveyor belt sushi: sushi, kamameshi, and other meals under a JPY559.3bn, delivery: JPY57.1bn, and takeout: JPY70.0bn.) multibrand strategy. Aim is to grow sales and cover fixed costs. Also focusing on business handling meal orders, pick-up, and delivery for partner restaurants 02 R /16 RIDE ON EXPRESS 6082 Research Espresso by Shared Research | | Japan’s sushi market (JPYbn) 57.1 70.0 3% 4% 559.3 Japan's sushi 34% market (2014) 1,653.1 966.7 59% (JtYbn) Sushi delivery A la carte sushi restaurants Conveyor belt sushi Takeout Source: Shared Research based on Fuji Keizai data Stores take orders by phone or online. They prepare fish and other sushi toppings, hand-press the rice, arrange them on a tray or disposable container, and deliver to customers by motorbike around 30 minutes after the order is placed. The company also delivers kamameshi and other meals using the same stores, personnel, and delivery infrastructure. It is now focusing on a business that handles orders, pick-up, and delivery for partner restaurants. Key characteristics of food delivery Does not require prime locations: in contrast to the restaurant industry, where ◤ location has a major impact on customer footfall, delivery stores can be in residential areas, so properties are easy to find and rents are low (lowering fixed costs).