Dream Incubator / 4310
Total Page:16
File Type:pdf, Size:1020Kb
Dream Incubator / 4310 COVERAGE INITIATED ON: 2013.10.29 LAST UPDATE: 2021.07.01 Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our 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. Dream Incubator / 4310 RCoverage LAST UPDATE: 2021.07.01 Research Coverage Report by Shared Research Inc. | www.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 business section later in the report. Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3 Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 7 Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------ 7 Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 9 Quarterly trends and results ----------------------------------------------------------------------------------------------------------------------------------- 9 Company outlook for FY03/22 ------------------------------------------------------------------------------------------------------------------------------ 15 Company’s thinking on its own enterprise value ----------------------------------------------------------------------------------------------------- 16 Business ------------------------------------------------------------------------------------------------------------------------------------------------ 18 Business description -------------------------------------------------------------------------------------------------------------------------------------------- 18 Segment breakdown ------------------------------------------------------------------------------------------------------------------------------------------- 23 Business Production (formerly Professional Services; 11.9% of total sales in FY03/20) -------------------------------------------------- 24 Incubation Services (88.2% of total sales in FY03/20) ----------------------------------------------------------------------------------------------- 27 Profitability snapshot and financial ratios ---------------------------------------------------------------------------------------------------------------- 39 Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 41 Strengths and weaknesses ------------------------------------------------------------------------------------------------------------------------------------ 43 Historical performance and income statement -------------------------------------------------------------------------------------------- 44 Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 44 Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 60 Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 61 Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 61 News and topics ------------------------------------------------------------------------------------------------------------------------------------- 62 Other information ---------------------------------------------------------------------------------------------------------------------------------- 65 History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 65 Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 66 Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 66 IR activities --------------------------------------------------------------------------------------------------------------------------------------------------------- 66 Company profile ------------------------------------------------------------------------------------------------------------------------------------------------- 67 02/68 Dream Incubator / 4310 RCoverage LAST UPDATE: 2021.07.01 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Executive summary Consulting firm differentiating itself with “business producing” ◤ Dream Incubator (DI) is a consulting firm founded in April 2000 by former Boston Consulting Group (BCG) president Koichi Hori. The company says its core values lie in “business producing,” referring to tackling social challenges, planning businesses with visions and ideas beyond industry barriers, formulating strategies, gathering reliable partners, and creating added value. It has produced new businesses crossing various sectors, major companies, venture businesses, and borders since its founding. ◤ Mainstay businesses are the Business Production and Incubation businesses. In Business Production, the company provides strategic consulting, business producing support, M&A advisory, and core management development assistance to major corporations (domestically and overseas) and government agencies. In Incubation, the company provides venture investment and buy-and-hold business investment services, and leverages its principal investments to develop venture companies deemed integral to new industries. Overseas, the company aims to support innovation around the world by forming partnerships with promising venture capital companies in the US, China, and India for joint investment and consultation. In terms of accounting, the company books venture capital service profits when shares in the invested company are sold, whereas for buy-and-hold business investment services, it books consolidated profits or losses in proportion to the ownership ratio in the invested company. ◤ Dream Incubator has two main businesses, Business Production (formerly Professional Services) and Incubation, which includes the Venture Capital segment (the name was changed in Japanese only), the Pet Lifestyle segment (formerly the Insurance segment), and the HR Innovation segment (formerly the Other segment). As of FY03/21, the company has four consolidated reporting segments: Business Production, Venture Capital, Pet Lifestyle, and HR Innovation. Trends and outlook ◤ FY03/21 results: For FY03/21, the company reported full-year consolidated sales of JPY27.8bn (22.1% YoY), operating loss of JPY957mn (versus profit of JPY124mn in FY03/20), recurring loss of JPY971mn (versus loss of JPY25mn in FY03/20), and a net loss attributable to owners of the parent of JPY2.1bn (versus loss of JPY198mn in FY03/20). By segment, sales at the Business Production segment were down 13.4% YoY, due to the loss of sales from its market research business that it exited in Q2 FY03/20 as well as the lull of corporate interest in new business in the wake of the pandemic. At the Venture Capital segment, the company completed a number of trade sales and sales were up 36.2% YoY. At the Pet Lifestyle segment, sales were up 24.8% YoY, the strong growth driven by the record number of new policies in force, which benefited from strong growth in the pet insurance market. At the HR Innovation segment, sales were up 15.0% YoY, the growth driven by the expansion of its sales force (including those added to handle digital transformation projects), which easily offset the drag from the pandemic. At the operating profit level, the Business Production segment reported 9.0% growth in operating profit, the Venture Capital segment reported operating loss of JPY1.4bn (versus loss of JPY166mn in FY03/20), the Pet Lifestyle segment reported a 17.1% decline in operating profit, and the HR Innovation segment reported operating loss of JPY54mn (versus loss of JPY105mn). The jump in earnings at the Business Production segment reflected the company’s efforts to recoup the losses from the exit from its money-losing market research business and the result of management cost reviews. At the Venture Capital segment, the loss reflected a combination of fewer capital gains on stock sales as IPOs initially scheduled for F03/21 were delayed to FY03/22 or later