BEENOS 3328

BEENOS

Recent Updates

2021-11-30

Resolution regarding share repurchase

2021-11-05

FY FY09/21 flash update

2021-09-29

Q3 FY03/21 report update

Get in touch

Gotenyama Trust Tower 7F, 4-7-35 Kita-Shinagawa, Shinagawa-ku, Tokyo, 140-0001 JAPAN

http://beenos.com/

03-5739-3350

Summary

BEENOS Inc. (previously named netprice.com, Ltd.) operates cross-border e-commerce websites that target individual users. The company provides services such as website translation, exchange rate settlement, shipping, and customer service. Revenue comprises fees paid by users of these services. BEENOS has two business segments: E-Commerce (95% of revenue and 50% of operating profit in the past three years) and Incubation (5% and 50%).

Internet & Direct Marketing Retail

Key dates

2018-03-27

Coverage initiation

Full Report

2021-11-30

FY FY09/21 flash update

2021-11-05

Q3 FY09/21 flash update

2021-08-12

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Executive summary

Business overview

BEENOS Inc. (previously netprice.com, Ltd.) operates cross-border e-commerce websites that target individual users. The company provides services such as product information translation, exchange rate settlement, shipping, and customer service. The bulk of revenue comprises fees paid by users of these services. BEENOS has two business segments: E-Commerce (90% of revenue and 45% of operating profit in the past three years) and Incubation (10% and 55%).

E-Commerce breaks down into three sub-segments according to products handled and service structure (listed in order of profit contribution): 1) the Global Commerce business operated by tenso, inc. and Shop Airlines, Ltd., which conduct overseas forwarding and proxy purchasing; 2) the Value Cycle business operated by Defactostandard, Ltd. (delisted on January 9, 2020 after it became a wholly owned subsidiary), which operates the apparel reuse business, and JOYLAB, inc., which buys and sells alcoholic beverages; and 3) the Entertainment business operated by monosense, Ltd., which turns media personality- and subculture-based content into merchandise for sale online.

In Incubation, BEENOS invests in and develops e-commerce and other online platform related companies in Japan and overseas via two consolidated subsidiaries and creates new businesses. The Incubation business generates irregular revenue and profit, as the recovery timing of investment capital varies. BEENOS thinks the best earnings opportunities in e-commerce derive from having control over platforms and payment functions. Accordingly, rather than relatively mature e-commerce markets in such countries as China, the US, or Japan, in this segment BEENOS is stepping up investment in companies involved in online marketplaces and payments in emerging markets in Asia, where it thinks e-commerce is set to expand. While operating its own e-commerce business, BEENOS also invests in domestic and overseas businesses that have the potential to become market leaders. This way, it takes a hybrid management approach that also benefits from global growth. In creating new businesses, BEENOS focuses on initiatives that connect overseas platforms with Japanese companies and invests in travel and inbound tourism-related business areas.

Trends and outlook

For FY09/21, BEENOS reported full-year consolidated revenue of JPY25.0bn (-3.3% YoY), operating profit of JPY1.7bn (-50.9% YoY), recurring profit of JPY1.6bn (-49.9% YoY), and net income of JPY691mn (-63.5% YoY) on gross merchandise value handled of JPY64.6bn (+28.8% YoY). The drop in revenues and earnings was attributed largely to fewer sales of operational investment securities, roughly by JPY400mn for the year, which was JPY3.5bn less than the previous year. At its mainstay e-commerce business, both net sales and operating profit finished the year ahead of the company's projections made at the time of its Q2 results announcement.

The company did not provide guidance for FY09/22 consolidated results at the time of its FY09/21 results announcement, explaining that the timing of sales of operational investment securities held under its Incubation business was still uncertain, as it depended on the stage of development of the companies in which it has invested, and that the timing and size of investments in new businesses was uncertain. The company did provide guidance with respect to its mainstay e-commerce segment, providing a range forecast for gross merchandise value handled of JPY68.9bn (+7.7% YoY) to JPY77.5bn (+21.1% YoY), e-commerce sales of JPY26.7bn (+9.1% YoY) to JPY30.4bn (+24.2% YoY), and segment operating profit of JPY3.2bn (+5.6% YoY) to JPY4.2bn (+36.2% YoY).

BEENOS has not disclosed a medium-term business plan but aspires to “create a global platform to bridge Japan and the world.” It views cross-border challenges (different languages, prices, exchange rates, logistics) as business opportunities, and aims to establish a setting whereby Japanese companies can easily sell their products overseas and create markets to increase their distribution, leveraging information technology. In the long term, BEENOS aims to increase its gross merchandise value from JPY50.4bn in FY09/20 to JPY100bn. To this end, the company’s policy is to provide value-added in its cross-border e-commerce by forming alliances with major platforms in Japan and overseas so that it can offer overseas consumers a one-stop shop framework to buy Japanese products.

Based on global population trends and potential e-commerce growth, the company has been focusing development in Asia (excluding China), but has expanded its target to add China, Russia, and other countries. Also, BEENOS plans to extend the Incubation Business, which had mainly focused on Southeast Asia, to startups based in Japan, primarily inbound tourism-related companies.

Strengths and weaknesses

Shared Research sees BEENOS’ strengths as comprehensive services to facilitate cross-border transactions; high profile of Brandear in the apparel reuse industry; and experience in planning and managing licenses of subculture icons. We consider BEENOS’ weaknesses as earnings volatility in the Incubation Business; services that are not necessary for experienced cross-border shoppers; and an investment strategy that does not benefit from scale and growth of China. (See the Strengths and weaknesses section for details.)

Key financial data

		FY09/12	FY09/13	FY09/14	FY09/15	FY09/16	FY09/17	FY09/18	FY09/19	FY09/20	FY09/21	FY09/22
Income statement (JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons. Est.
Revenue		9,950	10,309	12,600	16,936	19,227	20,711	22,768	25,277	25,873	25,008	TBD
	YoY	-7.8%	3.6%	22.2%	34.4%	13.5%	7.7%	9.9%	11.0%	2.4%	-3.3%
Gross profit		4,471	4,820	6,064	8,868	10,045	11,186	11,891	12,665	13,745	12,341
	YoY	-4.8%	7.8%	25.8%	46.2%	13.3%	11.4%	6.3%	6.5%	8.5%	-10.2%
	Gross profit margin	44.9%	46.8%	48.1%	52.4%	52.2%	54.0%	52.2%	50.1%	53.1%	49.3%
Operating profit		-311	-225	-359	1,185	1,200	1,507	1,534	1,708	3,376	1,658
	YoY	-	-	-	-	1.3%	25.6%	1.7%	11.4%	97.7%	-50.9%
	Operating profit margin	-3.1%	-2.2%	-2.8%	7.0%	6.2%	7.3%	6.7%	6.8%	13.0%	6.6%
Recurring profit		-130	134	-368	1,148	1,212	1,553	1,729	1,714	3,283	1,646
	YoY	-	-	-	-	5.5%	28.1%	11.3%	-0.9%	91.6%	-49.9%
	Recurring profit margin	-1.3%	1.3%	-2.9%	6.8%	6.3%	7.5%	7.6%	6.8%	12.7%	6.6%
Net income		-351	36	-451	898	941	1,011	923	1,077	1,892	691
	YoY	-	-	-	-	4.7%	7.5%	-8.7%	16.7%	75.6%	-63.5%
	Net margin	-	0.3%	-	5.3%	4.9%	4.9%	4.1%	4.3%	7.3%	2.8%
Per-share data (JPY)
Shares issued (year-end; '000)		113	113	12,267	12,267	12,267	12,333	12,333	12,333	13,336	13
EPS		-31.6	3.2	-37.8	73.8	77.1	82.4	75.6	89.6	151.3	53.8
EPS (fully diluted)		-	3.2	-	73.2	76.9	82.4	-	-	-	-
Dividend per share		-	-	-	13.0	13.0	18.0	13.0	18.0	20.0	25.0	-
Book value per share		337.6	360.4	365.2	448.2	548.8	638.1	673.5	713.2	882.1	876.6
Balance sheet (JPYmn)
	Cash and cash equivalents	3,061	2,553	2,458	3,277	6,307	6,542	5,920	5,176	9,976	7,771
Total current assets		4,558	4,294	6,692	8,746	11,787	13,014	13,313	16,407	19,858	17,997
Tangible fixed assets		135	103	72	220	212	254	459	418	342	378
Investments and other assets		1,029	1,606	660	927	917	1,228	1,411	1,531	2,286	2,887
Intangible assets		302	432	282	126	180	254	508	455	543	536
Total assets		6,024	6,436	7,706	10,019	13,095	14,750	15,691	18,811	23,030	21,797
	Accounts payable	402	366	302	398	395	440	379	385	348	234
	Short-term debt	757	864	1,025	920	935	1,148	1,643	3,550	1,900	1,900
Total current liabilities		1,927	2,116	3,079	4,184	4,831	5,255	5,692	8,159	9,684	8,466
	Long-term debt	150	90	10	0	75	83	19	0	1,722	1,738
Total fixed liabilities		240	207	69	156	239	254	208	481	2,136	1,935
Total liabilities		2,167	2,323	3,148	4,340	5,070	5,510	5,900	8,640	11,819	10,401
Total net assets		3,858	4,112	4,558	5,679	8,026	9,240	9,791	10,171	11,210	11,396
Total liabilities and net assets		6,024	6,436	7,706	10,019	13,095	14,750	15,691	18,811	23,030	21,797
Total interest-bearing debt		907	954	1,035	920	1,010	1,231	1,662	3,550	3,622	3,638
Cash flow statement (JPYmn)
Cash flows from operating activities		-303	-126	-828	1,058	1,531	421	-45	-1,769	5,955	-552
Cash flows from investing activities		-501	-410	92	-516	-173	-206	-397	-339	-578	-690
Cash flows from financing activities		-324	-22	836	221	1,873	-169	-123	1,434	-619	-905
Financial ratios
ROA (RP-based)		-	2.1%	-5.2%	13.0%	10.5%	11.2%	11.4%	9.9%	15.7%	7.3%
ROE		-	0.9%	-10.7%	18.2%	15.5%	13.9%	11.5%	12.9%	19.3%	6.2%
Equity ratio		62.4%	62.5%	57.5%	54.5%	51.1%	53.2%	52.4%	45.3%	48.3%	51.7%

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.
Note: The company initiated a 100-for-1 stock split on April 1, 2014. Book value per share, earnings or loss per share, and fully diluted earnings per share are calculated as though the split occurred at the beginning of FY09/10.

Performance by segment

Segment sales and profit				FY09/12	FY09/13	FY09/14	FY09/15	FY09/16	FY09/17	FY09/18	FY09/19	FY09/20	FY09/21
(JPYmn）				Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.
Revenue				9,950	10,309	12,600	16,936	19,227	20,711	22,768	25,277	25,873	25,008
	YoY			-7.8%	3.6%	22.2%	34.4%	13.5%	7.7%	9.9%	11.0%	2.4%	-3.3%
	E-Commerce			9,641	10,294	12,433	15,896	18,023	19,735	21,564	23,031	22,118	24,478
		YoY		-1.3%	6.8%	20.8%	27.9%	13.4%	9.5%	9.3%	6.8%	-4.0%	10.7%
		% of total		96.8%	99.8%	98.7%	93.9%	93.7%	95.3%	94.7%	91.1%	85.2%	97.0%
		Global Commerce		712	1,137	1,821	3,099	3,839	4,153	4,504	4,929	5,926	8,287
			YoY	-	59.8%	60.2%	70.2%	23.9%	8.2%	8.5%	9.4%	20.2%	39.9%
			% of total	7.1%	11.0%	14.5%	18.3%	20.0%	20.1%	19.8%	19.5%	22.8%	32.8%
		Value Cycle		3,405	4,361	6,387	8,622	9,628	10,514	12,424	13,165	12,181	12,027
			YoY	16.0%	28.1%	46.5%	35.0%	11.7%	9.2%	18.2%	6.0%	-7.5%	-1.3%
			% of total	34.2%	42.3%	50.7%	50.9%	50.1%	50.8%	54.6%	52.1%	46.9%	47.6%
		Entertainment		5,524	4,796	4,225	4,174	4,556	5,067	4,636	4,937	4,011	4,164
			YoY	-19.2%	-13.2%	-11.9%	-1.2%	9.2%	11.2%	-8.5%	6.5%	-18.8%	3.8%
			% of total	55.5%	46.5%	33.5%	24.6%	23.7%	24.5%	20.4%	19.5%	15.5%	16.5%
	Incubation			318	16	169	1,040	1,203	978	1,206	2,259	3,842	22
		YoY		-70.1%	-95.0%	957.2%	514.7%	15.6%	-18.7%	23.4%	87.3%	70.0%	-99.4%
		% of total		3.2%	0.2%	1.3%	6.1%	6.3%	4.7%	5.3%	8.9%	14.8%	0.1%
	Adjustments			-9	-1	-3	-1	0	-1	-1	-14	-87	-232
Operating profit				-311	-225	-359	1,185	1,200	1,507	1,534	1,708	3,376	1,658
	YoY			276.1%	-27.5%	-	-	1.3%	25.6%	1.7%	11.4%	97.7%	-50.9%
	E-Commerce			-168	184	96	771	743	1,169	1,246	842	1,698	3,048
		YoY		-	-	-47.9%	702.3%	-3.6%	57.4%	6.5%	-32.4%	101.8%	79.5%
		Operating profit margin		-1.7%	1.8%	0.8%	4.8%	4.1%	5.9%	5.8%	3.7%	7.7%	12.5%
		Global Commerce		122	96	18	425	260	673	685	726	1,686	2,812
			YoY	-	-20.8%	-81.2%	2,249.3%	-38.7%	158.6%	1.7%	6.1%	132.2%	66.8%
			Operating profit margin	-	-	-	13.7%	6.8%	16.2%	15.2%	14.7%	28.5%	33.9%
		Value Cycle		-20	131	149	178	323	439	440	-7	104	68
			YoY	-	-	13.7%	19.0%	81.6%	36.0%	0.2%	-	-	-34.1%
			Operating profit margin	-	-	2.3%	2.1%	3.4%	4.2%	3.5%	-	0.9%	0.6%
		Entertainment		-270	-44	-71	168	160	57	121	123	-91	168
			YoY	-	-	-	-	-4.8%	-64.3%	112.5%	1.3%	-	-
			Operating profit margin	-4.9%	-0.9%	-1.7%	4.0%	3.5%	1.1%	2.6%	2.5%	-	4.0%
	Incubation			-13	-159	-254	744	773	738	788	1,403	2,475	-494
		YoY		-	-	-	-	3.9%	-4.6%	6.8%	77.9%	76.5%	-
		Operating profit margin		-	-	-	71.5%	64.3%	75.5%	65.3%	62.1%	64.4%	-
	Adjustments			-130	-250	-201	-330	-316	-400	-501	-537	-797	-869

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.
Starting in FY09/21, the Cross Border business has been renamed the Global Commerce business, and the Retail and Licensing business renamed the Entertainment business.

Recent updates

Resolution regarding share repurchase

2021-11-29

BEENOS Inc. has announced a resolution regarding the repurchase of its shares.

(Click here for the Release)

The company held an extraordinary meeting of the Board of Directors, and on the same day announced its decision to repurchase its own shares in order to implement a flexible capital strategy in response to changes in the business environment. The details are as outlined below. As of September 30, 2021, the total number of outstanding shares (excluding treasury stock) was 12,845,360, and treasury shares numbered 490,635.


Shares to be repurchased	Common shares
Total number of shares that may be acquired	200,000 (1.6% of total outstanding shares (excluding treasury stock))
Total acquisition cost	JPY500mn
Acquisition period	November 30, 2021 - January 31, 2022

Posting gains from the sale of operational investment securities

2021-09-17

BEENOS Inc. announced its gains from the sale of operational investment securities.

(Click here to see the release)

The company announced that it had gained revenue by selling part of its operational investment securities that BEENOS and its consolidated subsidiary owns.

Details of the gains

Sold on September 16, 2021
Stocks that were sold: two overseas listed securities
Sold at: JPY480mn
Gains: JPY420mn

The company expects to record revenue of JPY480mn and operating profit of JPY420mn in Incubation business in Q4 FY09/21 through the sale of the operational investment securities.

Trends and outlook

Quarterly trends and results

Cumulative		FY09/19				FY09/20				FY09/21
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Revenue		5,309	11,690	17,561	25,277	8,129	14,286	19,502	25,873	6,276	12,424	18,341	25,008
	YoY	-1.0%	10.2%	4.6%	11.0%	53.1%	22.2%	11.1%	2.4%	-22.8%	-13.0%	-6.0%	-3.3%
Gross profit		2,516	5,549	8,288	12,665	5,076	8,027	10,538	13,745	3,163	6,231	9,180	12,341
	YoY	-11.9%	-2.6%	-6.3%	6.5%	101.7%	44.7%	27.1%	8.5%	-37.7%	-22.4%	-12.9%	-10.2%
	Gross profit margin	47.4%	47.5%	47.2%	50.1%	62.4%	56.2%	54.0%	53.1%	50.4%	50.2%	50.0%	49.3%
SG&A expenses		2,830	5,568	8,364	10,958	2,709	5,411	7,781	10,369	2,818	5,480	8,089	10,656
	YoY	2.5%	9.7%	5.5%	5.8%	-4.3%	-2.8%	-7.0%	-5.4%	4.0%	1.3%	4.0%	2.8%
	SG&A ratio	53.3%	47.6%	47.6%	43.4%	33.3%	37.9%	39.9%	40.1%	44.9%	44.1%	44.1%	42.6%
Operating profit		-314	-19	-76	1,708	2,367	2,616	2,757	3,376	345	751	1,090	1,658
	YoY	-	-	-	11.4%	-	-	-	97.7%	-85.4%	-71.3%	-60.5%	-50.9%
	Operating profit margin	-	-	-	6.8%	29.1%	18.3%	14.1%	13.0%	5.5%	6.0%	5.9%	6.6%
Recurring profit		-289	1	-63	1,714	2,368	2,606	2,719	3,283	312	733	1,065	1,646
	YoY	-	-99.9%	-	-0.9%	-	-	-	91.6%	-86.8%	-71.9%	-60.8%	-49.9%
	Recurring profit margin	-	0.0%	-	6.8%	29.1%	18.2%	13.9%	12.7%	5.0%	5.9%	5.8%	6.6%
Net income		-201	-69	-129	1,077	1,595	1,711	1,784	1,892	123	285	449	691
	YoY	-	-	-	16.7%	-	-	-	75.6%	-92.3%	-83.3%	-74.8%	-63.5%
	Net margin	-	-	-	4.3%	19.6%	12.0%	9.1%	7.3%	2.0%	2.3%	2.4%	2.8%
Quarterly		FY09/19				FY09/20				FY09/21
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		5,309	6,381	5,871	7,716	8,129	6,157	5,216	6,371	6,276	6,148	5,917	6,667
	YoY	-1.0%	21.6%	-5.1%	29.2%	53.1%	-3.5%	-11.2%	-17.4%	-22.8%	-0.1%	13.4%	4.7%
Gross profit		2,516	3,033	2,739	4,377	5,076	2,951	2,511	3,207	3,163	3,067	2,949	3,161
	YoY	-11.9%	6.8%	-13.1%	43.9%	101.7%	-2.7%	-8.3%	-26.7%	-37.7%	3.9%	17.4%	-1.4%
	Gross profit margin	47.4%	47.5%	46.7%	56.7%	62.4%	47.9%	48.1%	50.3%	50.4%	49.9%	49.8%	47.4%
SG&A expenses		2,830	2,737	2,797	2,593	2,709	2,701	2,370	2,588	2,818	2,661	2,610	2,566
	YoY	2.5%	18.2%	-1.9%	6.8%	-4.3%	-1.3%	-15.2%	-0.2%	4.0%	-1.5%	10.1%	-0.8%
	SG&A ratio	53.3%	42.9%	47.6%	33.6%	33.3%	43.9%	45.4%	40.6%	44.9%	43.3%	44.1%	38.5%
Operating profit		-314	295	-58	1,784	2,367	249	141	619	345	406	339	568
	YoY	-	-43.6%	-	190.9%	-	-15.5%	-	-65.3%	-85.4%	62.7%	140.7%	-8.3%
	Operating profit margin	-	4.6%	-	23.1%	29.1%	4.1%	2.7%	9.7%	5.5%	6.6%	5.7%	8.5%
Recurring profit		-289	290	-64	1,777	2,368	238	113	564	312	421	332	580
	YoY	-	-53.2%	-	184.4%	-	-17.8%	-	-68.2%	-86.8%	76.8%	194.5%	2.8%
	Recurring profit margin	-	4.5%	-	23.0%	29.1%	3.9%	2.2%	8.9%	5.0%	6.8%	5.6%	8.7%
Net income		-201	132	-60	1,206	1,595	117	73	107	123	162	164	242
	YoY	-	-60.7%	-	183.8%	-	-11.2%	-	-91.1%	-92.3%	38.7%	125.2%	125.2%
	Net margin	-	2.1%	-	15.6%	19.6%	1.9%	1.4%	1.7%	2.0%	2.6%	2.8%	3.6%

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.
Note: Net income is net income attributable to owners of the parent.

Quarterly gross merchandise value by segment (segment names changed in FY09/21)

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.

Performance by segment (segment names changed in FY09/21)

By segment (cumulative)				FY09/19				FY09/20				FY09/21
(JPYmn）				Q1	Q1-Q2	Q1-Q3	Q1–Q4	Q1	Q1-Q2	Q1-Q3	Q1–Q4	Q1	Q1-Q2	Q1-Q3	Q1–Q4
Revenue				5,309	11,690	17,561	25,277	8,129	14,286	19,502	25,873	6,276	12,424	18,341	25,008
	YoY			-1.0%	10.2%	4.6%	11.0%	53.1%	22.2%	11.1%	2.4%	-22.8%	-13.0%	-6.0%	-3.3%
	E-Commerce			5,298	11,573	17,404	23,031	5,244	11,360	16,244	22,118	6,263	12,339	18,175	24,478
		YoY		-0.8%	13.2%	8.0%	6.8%	-1.0%	-1.8%	-6.7%	-4.0%	19.4%	8.6%	11.9%	10.7%
		% of total		99.7%	98.9%	99.0%	91.1%	64.3%	79.2%	83.0%	85.2%	99.6%	99.0%	98.8%	97.0%
		Global Commerce		1,163	2,404	3,699	4,929	1,231	2,803	4,216	5,926	1,769	3,838	6,070	8,287
			YoY	4.0%	6.2%	7.8%	9.4%	5.8%	16.6%	14.0%	20.2%	43.7%	36.9%	44.0%	39.9%
			% of total	21.9%	20.5%	21.0%	19.5%	15.1%	19.6%	21.5%	22.8%	28.1%	30.8%	33.0%	32.8%
		Value Cycle		3,353	6,689	9,914	13,165	3,149	6,338	9,061	12,181	2,840	5,729	8,767	12,027
			YoY	22.4%	16.4%	6.9%	6.0%	-6.1%	-5.2%	-8.6%	-7.5%	-9.8%	-9.6%	-3.2%	-1.3%
			% of total	63.1%	57.2%	56.4%	52.1%	38.6%	44.2%	46.3%	46.9%	45.2%	46.0%	47.6%	47.6%
		Entertainment		781	2,480	3,791	4,937	865	2,219	2,967	4,011	1,654	2,772	3,337	4,164
			YoY	-47.3%	12.1%	11.2%	6.5%	10.7%	-10.5%	-21.7%	-18.8%	91.3%	24.9%	12.5%	3.8%
			% of total	14.7%	21.2%	21.6%	19.5%	10.6%	15.5%	15.2%	15.5%	26.3%	22.2%	18.1%	16.5%
	Incubation			15	125	168	2,259	2,914	2,975	3,325	3,842	22	124	228	762
		YoY		-39.4%	-67.9%	-75.3%	87.3%	19,352.1%	2,278.3%	1,877.3%	70.0%	-99.2%	-95.8%	-93.1%	-80.2%
		% of total		0.3%	1.1%	1.0%	8.9%	35.7%	20.8%	17.0%	14.8%	0.4%	1.0%	1.2%	3.0%
	Adjustments			-3	-7	-11	-14	-29	-49	-68	-87	-9	-39	-62	-232
Operating profit				-314	-19	-76	1,708	2,367	2,616	2,757	3,376	345	751	1,090	1,658
	YoY			-	-	-	11.4%	-	-	-	97.7%	-85.4%	-71.3%	-60.5%	-50.9%
	Operating profit margin			-	-	-	6.8%	29.1%	18.3%	14.1%	13.0%	5.5%	6.0%	5.9%	6.6%
	E-Commerce			-126	253	443	842	217	816	1,093	1,698	771	1,587	2,334	3,048
		YoY		-	-62.8%	-51.5%	-32.4%	-	222.6%	146.9%	101.8%	255.8%	94.6%	113.5%	79.5%
		Operating profit margin		-2.4%	2.2%	2.5%	3.7%	4.1%	7.2%	6.7%	7.7%	12.3%	12.9%	12.8%	12.5%
		Global Commerce		94	290	540	726	283	785	1,140	1,686	579	1,293	2,076	2,812
			YoY	-46.1%	-19.1%	3.2%	6.1%	201.0%	171.1%	111.3%	132.2%	104.9%	64.8%	82.1%	66.8%
			Operating profit margin	8.1%	12.0%	14.6%	14.7%	23.0%	28.0%	27.0%	28.5%	32.7%	33.7%	34.2%	33.9%
		Value Cycle		-230	-105	-204	-7	-28	59	17	104	52	131	93	68
			YoY	-	-	-	-	-	-	-	-	-	120.6%	450.0%	-34.1%
			Operating profit margin	-	-	-	-	-	0.9%	0.2%	0.9%	1.8%	2.3%	1.1%	0.6%
		Entertainment		10	69	107	123	-38	-29	-64	-91	140	163	165	168
			YoY	-80.2%	99.2%	56.2%	1.3%	-	-	-	-	-	-	-	-
			Operating profit margin	1.2%	2.8%	2.8%	2.5%	-	-	-	-	8.5%	5.9%	4.9%	4.0%
	Incubation			-87	-73	-234	1,403	2,446	2,249	2,276	2,475	-246	-421	-644	-494
		YoY		-	-	-	77.9%	-	-	-	76.5%	-	-	-	-
		Operating profit margin		-	-	-	62.1%	83.9%	75.6%	68.4%	64.4%	-	-	-	-
	Adjustments			-101	-199	-285	-537	-296	-449	-612	-797	-180	-415	-600	-869

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.
Note: Figures for percentage of total calculated after inter-segment adjustments.

By segment (quarterly)				FY09/19				FY09/20				FY09/21
(JPYmn）				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue				5,309	6,381	5,871	7,716	8,129	6,157	5,216	6,371	6,276	6,148	5,917	6,667
	YoY			-1.0%	21.6%	-5.1%	29.2%	53.1%	-3.5%	-11.2%	-17.4%	-22.8%	-0.1%	13.4%	4.7%
	E-Commerce			5,298	6,275	5,831	5,628	5,244	6,116	4,884	5,874	6,263	6,077	5,835	6,303
		YoY		-0.8%	28.6%	-1.0%	3.3%	-1.0%	-2.5%	-16.2%	4.4%	19.4%	-0.6%	19.5%	7.3%
		% of total		99.7%	98.3%	99.3%	72.9%	64.3%	99.0%	93.3%	91.9%	99.6%	98.4%	98.2%	92.2%
		Global Commerce		1,163	1,240	1,295	1,231	1,231	1,572	1,413	1,710	1,769	2,069	2,232	2,218
			YoY	4.0%	8.4%	11.0%	14.7%	5.8%	26.7%	9.1%	38.9%	43.7%	31.6%	57.9%	29.7%
			% of total	21.9%	19.4%	22.0%	15.9%	15.1%	25.5%	27.0%	26.8%	28.1%	33.5%	37.6%	32.4%
		Value Cycle		3,353	3,336	3,225	3,251	3,149	3,189	2,723	3,120	2,840	2,889	3,039	3,259
			YoY	22.4%	10.9%	-8.6%	3.2%	-6.1%	-4.4%	-15.6%	-4.0%	-9.8%	-9.4%	11.6%	4.5%
			% of total	63.1%	52.2%	54.9%	42.1%	38.6%	51.6%	52.0%	48.8%	45.2%	46.8%	51.2%	47.7%
		Entertainment		781	1,698	1,312	1,146	865	1,354	748	1,045	1,654	1,119	565	827
			YoY	-47.3%	133.2%	9.4%	-6.5%	10.7%	-20.2%	-43.0%	-8.9%	91.3%	-17.4%	-24.5%	-20.9%
			% of total	14.7%	26.6%	22.3%	14.8%	10.6%	21.9%	14.3%	16.3%	26.3%	18.1%	9.5%	12.1%
	Incubation			15	110	43	2,091	2,914	62	350	516	22	102	104	534
		YoY		-39.4%	-69.8%	-85.3%	298.9%	19,352.1%	-44.2%	712.4%	-75.3%	-99.2%	65.4%	-70.3%	3.4%
		% of total		0.3%	1.7%	0.7%	27.1%	35.7%	1.0%	6.7%	8.1%	0.4%	1.6%	1.8%	7.8%
	Adjustments			-3	-4	-3	-3	-29	-20	-18	-19	-9	-31	-22	-170
Operating profit				-314	295	-58	1,784	2,367	249	141	619	345	406	339	568
	YoY			-	-43.6%	-	190.9%	-	-15.5%	-	-65.3%	-85.4%	62.7%	140.7%	-8.3%
	Operating profit margin			-	4.6%	-	23.1%	29.1%	4.1%	2.7%	9.7%	5.5%	6.6%	5.7%	8.5%
	E-Commerce			-126	379	190	399	217	599	277	605	771	816	747	714
		YoY		-	-12.5%	-18.7%	19.8%	-	57.9%	46.1%	51.7%	255.8%	36.2%	169.3%	17.9%
		Operating profit margin		-	6.0%	3.3%	7.1%	4.1%	9.8%	5.7%	10.3%	12.3%	13.4%	12.8%	11.3%
		Global Commerce		94	196	250	186	283	502	355	546	579	714	783	736
			YoY	-46.1%	6.7%	51.5%	15.3%	201.0%	156.7%	42.0%	193.0%	104.9%	42.2%	120.3%	34.8%
			Operating profit margin	8.1%	15.8%	19.3%	15.1%	23.0%	31.9%	25.1%	31.9%	32.7%	34.5%	35.1%	33.2%
		Value Cycle		-230	125	-99	197	-28	87	-42	87	52	79	-38	-25
			YoY	-	-52.8%	-	65.5%	-	-30.2%	-	-56.2%	-	-9.0%	-	-128.8%
			Operating profit margin	-	3.7%	-	6.1%	-	2.7%	-	2.8%	1.8%	2.7%	-	-0.8%
		Entertainment		10	59	39	15	-38	10	-36	-27	140	23	2	3
			YoY	-80.2%	-	13.1%	-71.0%	-	-83.5%	-	-	-	132.4%	-	-
			Operating profit margin	1.2%	3.5%	3.0%	1.3%	-	0.7%	-	-	8.5%	2.0%	-	-
	Incubation			-87	14	-161	1,636	2,446	-197	27	200	-246	-176	-222	150
		YoY		-	-	-	-	-	-	-	-	-	-	-	-
		Operating profit margin		-	13.1%	-	78.2%	83.9%	-	7.6%	38.7%	-	-	-	28.0%
	Adjustments			-101	-98	-87	-251	-296	-152	-163	-186	-180	-234	-186	-269

Consolidated operating profit (quarterly)

Source: Shared Research based on company dataNote: Figures may differ from company materials owing to differences in rounding methods.

FY09/21 results (out November 4, 2021)

Consolidated financial results for FY09/21 (October 2020–September 2021)

Revenue: JPY25.0bn (-3.3% YoY)
Operating profit: JPY1.7bn (-50.1% YoY)
Recurring profit: JPY1.6bn (-49.9% YoY)
Net income: JPY691mn (-63.5% YoY)
Gross merchandise value: JPY64.6bn (+28.2% YoY).

Gross merchandise value (GMV) of products sold in Japan and overseas rose 28.2% YoY, driving growth in sales and earnings at the company's mainstay E-Commerce segment. At the Incubation segment, the drop in revenue and earnings reflected fewer sales of operational investment securities, JPY400mn for the year was down by JPY3.5bn versus the previous year.

Results by segment and sub-segment are detailed below. Please note, starting in FY09/21, sub-segment names under the E-Commerce segment have been changed.

E-Commerce segment

Gross merchandise value: JPY64.0bn (+27.7% YoY)
Segment revenue: JPY24.5bn (+10.7% YoY)
Segment operating profit: JPY3.0bn (+79.5% YoY)

Global Commerce (formerly Cross Border)

Gross merchandise value: JPY43.9bn (+47.8% YoY)
Sub-segment revenue: JPY8.3bn (+39.9% YoY)
Sub-segment operating profit: JPY2.8bn (+66.8% YoY)

Overseas forwarding and proxy purchasing business (from Japan)

Growth in the gross merchandise value handled was aided by the company’s move to expand its international shipping alternatives to various countries in response to delivery delays/suspensions of service by some shipping service providers in the wake of the pandemic. In particular, orders from the U.S. increased due to the introduction in February 2021 of a delivery service to North America that is on average 50% cheaper than the previous service, resulting in highly competitive shipping rates. Making its overseas forwarding and proxy purchasing business much more price competitive in terms of shipping cost allowed the company to establish a partnership with eBay's global online marketplace to handle purchases of goods sold on eBay's US website by customers in Asia.

At the same time, however, the company's take rate (as a percent of gross merchandise value handled) slipped from Q3 to Q4 as it strove to keep the cost of international shipping to users the same even as its own shipping costs rose. This situation will only be temporary, according to the company, as it plans to raise its international shipping charges going forward.

The company noted that during the course of Q3 it had established its own independent distribution channel in Russia to further seek growth in cross-border shipments in this rapidly growing e-commerce market. With this new shipping channel the company aims increase the convenience of its service to users in Russia by reducing the time from order to package arrival to only about 10 days compared with several months previously (when the only shipping option was surface mail by ship) while at the same time holding down shipping costs to the consumer.

Meanwhile, the number of domestic partners is increasing. The company's Buyee Connect is a service that allows users to sell products overseas by simply inserting a few lines of tags on their websites. Locondo, Inc. (TSE Mothers: 3558) and Urban Research Co., Ltd. (unlisted) adopted the service for their respective sites LOCONDO.jp and URBAN RESEARCH ONLINE STORE. Buyee Connect provides major overseas payment methods such as Paypal and Alipay, as well as customer support in English, Chinese, and other languages.

Global shopping business (To Japan)

The company strengthened its earnings structure through ongoing search engine optimization (SEO) strategy, process automation and other measures aimed at improving operations efficiency, and changes on the distribution. It also released smartphone app Sekaimon and implemented personalized marketing to boost active user count. In California, where the company's warehouse is located, there were some temporary operational delays due to the spread of COVID-19, but the company indicated that operations had returned to normal by end-Q2.

Value Cycle

Gross merchandise value: JPY:12.0bn (-1.3% YoY)
Sub-segment revenue: JPY12.0bn (-1.3% YoY)
Sub-segment operating profit: JPY68.0mn (-34.1% YoY)

Revenue fell due to a decline in demand for brand apparel as a result of the re-emergence of COVID-19 in Japan. Purchasing prices rose significantly due to the opening of more stores specialized in purchasing.

Brand apparel reuse business

To handle purchases of luxury handbags and other high-ticket goods, during FY09/21 the company opened five new brick-and-mortar Brandear stores, increasing the total to eight (including jointly operations with JOYLAB), while further increasing its average purchasing prices. It also implemented additional measures to facilitate the handling of more transactions not done in person; its online appraising service Brandear Bell, for example, began appraising watches and other fashion accessories, and its delivery purchasing service began offering insurance on packages of up to five million yen so as to bring peace of mind on shipping in expensive items they had agreed to sell.

Domestic sales of luxury brand goods and apparel finished the year down as demand in this area waned amid the pandemic with series of emergency declarations and restrictions on business (with this especially impacting the metropolitan Tokyo area). Meanwhile, overseas, the company worked to further expand its cross-border sales channels with live customer interface capabilities, including a partnership with Shopee (the e-commerce juggernaut in Taiwan and the six Southeast Asia countries) and an online store in Tmall Global (one of China's largest online shopping mall for cross-border sales). With the help these efforts, the company was able to boost overseas sales as a percent of total sales up from 14.9% in Q3 to 18.7% in Q4.

Liquor mediation business

At its liquor mediation business, the number of new customers increased and the purchase volume increased. The company was able to capture demand as it strengthened its marketing efforts and enabling purchase through LINE app, and increased purchase and cash conversion from restaurants, which had to restrict operation due to measures to prevent the spread of COVID-19 and restrictions on serving alcoholic beverages. As a result, the number of new customers increased and the purchase volume increased. On the sales front, the pandemic caused an increase in opportunities to drink at home and the popularity of domestically produced whiskey, which is in short supply, also contributed to steady sales. In addition, the Vintage Search service, which searches for and sells rare alcoholic beverages on behalf of users, was launched to improve user convenience. Brand purchases at JOYLAB stores, which were launched to create synergies within the group, are also increasing steadily.

Entertainment (formerly Retailing and Licensing)

Gross merchandise value: JPY8.1bn (-1.2% YoY)
Sub-segment revenue: JPY4.2bn (+3.8% YoY)
Sub-segment operating profit: JPY168mn (versus year-earlier loss of JPY91mn)

Entertainment business

Product sales at event venues dropped sharply as the pandemic forced the cancellation of many in-person events. The company stayed profitable by focusing its efforts on selling goods online, where margins are actually higher than at in-person event venues, and by improving operational efficiency and otherwise reducing fixed costs.

Global product business

Here, the company reported steady growth in sales of its original cosmetic brand 366, which with its offering of 366 different fragrances of perfumes and mists (one for each day of the year), proved very popular as a gift.

Incubation segment

Gross merchandise value: JPY600mn (+82.4% YoY)
Segment revenue: JPY762mn (-80.2% YoY)
Segment operating loss: JPY494mn (versus year-earlier profit of JPY2.5bn)

During the year the company sold only about JPY400mn worth of operational investment securities held under the Incubation business. This sale left it with operational investment securities with a book value of JPY4.1bn (-JPY700mn YoY) and a market value* of JPY20.4bn (-500mn YoY) as of the end of FY09/21. (*Market value based on actual market price of shares in listed companies and the most recent sales price of shares in unlisted companies. (The company discloses the book value of operational investment securities at the end of March and September each year.)

Incubation business

Under its Incubation business, the company primarily invests in online marketplace and online payment businesses in emerging markets and startup companies dealing with consumer goods and services for the inbound tourist market in Japan. The company also aims to generate synergies with investees. One example is Vpon JAPAN Inc., a domestic company in which BEENOS has invested and with whom it has partnered to create a digital solutions service in the cross-border market. Through this alliance, the company is now able to provide integrated digital marketing services for companies targeting travelers visiting Japan from countries such as Taiwan and Hong Kong, and those seeking to develop in overseas markets by opening cross-border e-commerce stores or through other means. Vpon Japan and subsidiary BEENOS Travel together provide services in the inbound travel market, including a testing service for tourists arriving in Japan who have seen the relevant ads or articles.

Due to the acceleration of the global digital shift, many of the investee companies have either experienced growth or remained the same size during the COVID-19 pandemic. The company plans to recover its investments in these companies at an appropriate time according to the progress of each business.

New businesses

In Q1, the company partnered with Lazada, one of Southeast Asia’s largest e-commerce platforms, and began providing support for Japanese companies looking to set up online stores on Lazada. In Q2, the company launched support for the partnering of Mercari of Japan with the Alibaba Group’s C2C marketplace Taobao and flea market app Xianyu, thus allowing Taobao and Xianyu users in China to make purchases on Mercari. It also entered into a business alliance with Coupang, one of South Korea's largest online marketplaces. In these tie-ups between overseas platforms and Japanese companies, BEENOS is responsible for system development, translation of product pages, proxy purchasing, multilingual customer support, and overseas delivery.

Subsidiary Beenos Entertainment Inc. launched Groobee, a platform that allows users to open an entertainment e-commerce site in as little as five business days. In the travel domain, Metro Engines Co., Ltd. and subsidiary BEENOS Travel operate Monthly Hotel, a hotel reservation site specializing in long-term stays.

Company forecast for FY09/22

		FY09/19			FY09/20			FY09/21
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.
Revenue		11,690	13,587	25,277	14,286	11,587	25,873	12,424	12,585	25,008
	YoY	10.2%	11.8%	11.0%	22.2%	-14.7%	2.4%	-13.0%	8.6%	-3.3%
Cost of revenue		6,141	6,470	12,611	6,259	5,868	12,128	6,193	6,475	12,668
Gross profit		5,549	7,117	12,665	8,027	5,719	13,745	6,231	6,110	12,341
	Gross profit margin	47.5%	52.4%	6.5%	56.2%	49.4%	53.1%	50.2%	48.6%	49.3%
SG&A expenses		5,568	5,390	10,958	5,411	4,959	10,369	5,480	5,176	10,656
	SG&A ratio	47.6%	39.7%	43.4%	37.9%	42.8%	40.1%	44.1%	41.1%	42.6%
Operating profit		-19	1,726	1,708	2,616	760	3,376	751	907	1,658
	YoY	-	88.6%	11.4%	-	-56.0%	97.7%	-71.3%	19.3%	-50.9%
	Operating profit margin	-	12.7%	6.8%	18.3%	6.6%	13.0%	6.0%	7.2%	6.6%
Recurring profit		1	1,713	1,714	2,606	677	3,283	733	913	1,646
	YoY	-99.9%	76.0%	-0.9%	286,581.6%	-60.5%	91.6%	-71.9%	34.8%	-49.9%
	Recurring profit margin	0.0%	12.6%	6.8%	18.2%	5.8%	12.7%	5.9%	7.3%	6.6%
Net income		-69	1,146	1,077	1,711	180	1,892	285	406	691
	YoY	-	108.1%	16.7%	-	-84.3%	75.6%	-83.3%	125.2%	-63.5%
	Net margin	-	8.4%	4.3%	12.0%	1.6%	7.3%	2.3%	3.2%	2.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.

The forecast by segment in the E-Commerce Business is as follows.

BEENOS focuses on GMV (total transaction amount for products handled by the group’s various companies) as a key performance indicator, so the initial outlook by segment was previously provided in GMV estimates instead of revenue estimates, but the revised outlook also includes revenue and operating profit estimates from FY09/21.

E-Commerce segment: company estimates for FY09/22

(JPYmn)			FY09/20	FY09/21								FY09/22
			Act.	Initial Est.	YoY	Rev. Est. (May 6)	YoY	Rev. Est. (August 12)	YoY	Act.	YoY	Initial Est.	YoY
Gross merchandise value	E-Commerce		50,100	55,200	10.2%	62,400	24.6%	64,000	27.7%	64,000	27.7%	68,900~77,500	8~21%
		Global Commerce (former Cross Border)	29,700	34,200	15.2%	39,700	33.7%	43,900	47.8%	43,900	47.8%	48,000~53,000	9~21%
		Value Cycle (former Value Cycle)	12,181	13,000	6.7%	12,000	-1.5%	11,900	-2.3%	12,027	-1.3%	14,500~16,000	21~33%
		Entertainment (former Retailing and Licensing)	8,200	8,000	-2.4%	10,600	29.3%	8,200	0.0%	8,100	-1.2%	6,400~8,500	-21~5%
Revenue	E-Commerce		22,118	24,600	11.2%	24,300	9.9%	24,300	9.9%	24,478	10.7%	26,700~30,400	9~24%
		Global Commerce (former Cross Border)	5,926	7,600	28.3%	7,800	31.6%	8,200	38.4%	8,287	39.9%	8,900~9,900	7~19%
		Value Cycle (former Value Cycle)	12,181	13,000	6.7%	12,000	-1.5%	11,900	-2.3%	12,027	-1.3%	14,500~16,000	21~33%
		Entertainment (former Retailing and Licensing)	4,011	4,000	-0.3%	4,400	9.7%	4,100	2.2%	4,164	3.8%	3,300~4,500	-21~8%
Operating profit	E-Commerce		1,698	2,330	37.2%	2,870	69.0%	3,030	78.4%	3,048	79.5%	3,220~4,150	6~36%
		Global Commerce (former Cross Border)	1,686	2,150	27.5%	2,550	51.2%	2,870	70.2%	2,812	66.8%	2,900~3,600	3~28%
		Value Cycle (former Value Cycle)	104	180	73.9%	180	73.9%	30	-71.0%	68	-34.1%	250~350	266~412%
		Entertainment (former Retailing and Licensing)	-91	0	-	140	-	130	-	168	-	70~200	58~19%

Source: Shared Research based on company data
Note: Since Value Cycle involves only the sale of goods, GMV and revenue are the same amount.

E-Commerce segment

Segment GMV: JPY68.9bn (+7.7% YoY) to JPY77.5bn (+21.1% YoY)
Segment revenue: JPY26.7bn (+9.1% YoY) to JPY30.4bn (+20.7% YoY)
Segment operating profit: JPY3.2bn (+5.6% YoY) to JPY4.2bn (+36.2% YoY)

Global Commerce business (formerly the Cross Border business)

Sub-segment GMV: JPY48.0bn (+9.3% YoY) to JPY53.0bn(+20.7% YoY)
Sub-segment revenue: JPY8.9bn (+7.4% YoY) to JPY9.9bn (+19.5% YoY)
Sub-segment operating profit: JPY2.9bn (+3.1% YoY) to JPY3.6bn (+28.0% YoY)

At the From Japan business, the company sees revenues and earnings continuing to grow amid an expanding market. In strategic growth markets such as Russia, where it established its own shipping channel last year, the company is looking to further raise both its brand recognition and market presence. It is also looking to build on its From Japan service and increase cross-border merchandise volumes handled through new channels that do no directly involve Japan, such as between the US and other countries in Asia, though in the process will keep a close eye on the potential impact on its take rate of restrictions on access to certain countries and the rising cost of international shipping. Meanwhile, at its To Japan business, the company will continue working to stabilize its earnings stream with the help of further streamlining and automation of its operations to help minimize the resources devoted to this area. Risks include an increasingly competitive pricing environment and higher promotional costs.

Value Cycle business

Sub-segment GMV: JPY14.5bn (+20.6% YoY) to JPY16.0bn (+33.0% YoY)
Sub-segment revenue: JPY14.5bn (20.6% YoY) to JPY16.0bn (+33.0% YoY)
Sub-segment operating profit: JPY250mn (+266.2% YoY) to JPY350mn (+412.7% YoY)

At the Apparel Reuse business, strategic plans call for continuing its shift towards high-ticket goods and expanding sales overseas. Towards this end, the company plans to continue adding brick-and-mortar stores to buy these goods from Japanese consumers for resale via overseas platforms, thereby adding to both gross merchandise value handled and segment profit. At the same time, the company will also be working to increase cost efficiencies by creating a business infrastructure that is best-suited to the purchasing and resale of high-ticket items. At the company's Liquor Mediation business, plans call for the addition of more brick-and-mortar stores jointly operated with Brandear, further coordination with other group companies to help grow purchasing operations, and the expansion of overseas channels for selling popular brands of Japanese whisky and other Japanese-made spirits. Risks here include the timing of the end of the pandemic-related restriction, and the pace of post-pandemic recovery in demand.

Entertainment business (formerly the Retail and Licensing business)

Sub-segment GMV: JPY6.4bn (-21.0% YoY) to JPY8.5bn (+4.9% YoY)
Sub-segment revenue: JPY3.3bn (-20.7% YoY) to JPY4.5bn (+8.1% YoY)
Sub-segment operating profit: JPY70mn (-58.3% YoY) to JPY200mn (+19.1% YoY)

At the Entertainment business, plans call for creating a business model that is not dependent on sales at live, in-person events, but will instead seek to maximize the returns to the content owners/creators by promoting merchandise sales through new online channels, including purpose-built websites just for fans. Risks here include the timing of the end of the pandemic and related restrictions on major event business customers that might affect the frequency and size of in-person events in the future.

Incubation segment

Incubation business

With regard to the type of investments made by the company under its Incubation business, in the past BEENOS focused mainly on growth markets that it knew well and thus directed most of its investments toward online marketplace operators and online payment companies operating in emerging market countries. Recognizing that it has largely covered these markets and regions, it has recently turned the focus of its investments toward domestic startup companies in businesses catering to overseas tourists in Japan, the domestic travel market, and the domestic entertainment market. While these markets have all shrunk in the wake of the pandemic, the company plans to continue investing in these areas with its eye on growth prospects over the medium to long term. With regard to its exit strategy, the company noted that among its investments there are companies that are likely to be listed via an IPO in the near future. Having said that, the exact timing of the sales of its holdings is hard to project, as is the amount it might be expect to realize from the sale. Nevertheless, the company said it intends to take full advantage of opportunities to exit existing investments when the timing is right.

New businesses

With respect to new businesses, the company said it will continue focusing its efforts on creating new businesses in the ever-evolving online marketplace and, towards that end, will continue systems development work and looking for new business partners and investment opportunities in this arena. The company noted that it was currently finding opportunities to provide support for problem-solving in the entertainment field and was also expanding support services for companies in the travel business (particularly those providing services for foreign tourists visiting Japan), establishing a special platform to provide data and AI applications. Although the pandemic had forced it to make changes to its initial plans, the company said it will continue monitoring the financial health of the companies in which it has invested and make more investments in this area as appropriate.

Differences between historical company forecasts and results

Results vs. Initial Est.		FY09/12	FY09/13	FY09/14	FY09/15	FY09/16	FY09/17	FY09/18	FY09/19	FY09/20	FY09/21
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.
	Revenue (Initial Est.)	12,000	-	-	17,000	19,600	20,000	-	-	26,000	-
	Revenue (Results)	9,950	10,309	12,600	16,936	19,227	20,711	22,768	25,277	25,873	25,008
Results vs. Initial Est.		-17.1%	-	-	-0.4%	-1.9%	3.6%	-	-	-0.5%	-
	Operating profit (Initial Est.)	250	-	-	600	1,000	1,400	-	-	3,000	-
	Operating profit (Results)	-311	-225	-359	1,185	1,200	1,507	1,534	1,708	3,376	1,658
Results vs. Initial Est.		-	-	-	97.5%	20.0%	7.7%	-	-	12.5%	-
	Recurring profit (Initial Est.)	150	-	-	570	950	1,400	-	-	3,000	-
	Recurring profit (Results)	-130	134	-368	1,148	1,212	1,553	1,729	1,714	3,283	1,646
Results vs. Initial Est.		-	-	-	101.5%	27.5%	10.9%	-	-	9.4%	-
	Net income (Initial Est.)	50	-	-	330	650	750	-	-	1,800	-
	Net income (Results)	-351	36	-451	898	941	1,011	923	1,077	1,892	691
Results vs. Initial Est.		-	-	-	172.2%	44.7%	34.9%	-	-	5.1%	-

Source: Shared Research based on company data
Note: Figures may differ from company materials owing to differences in rounding methods.
Note: There were no initial forecasts for FY09/13, FY09/14, and FY09/19.

The company did not provide any initial guidance for FY09/21, explaining that the timing of sales of operational investment securities held under its Incubation business was uncertain, as it was still looking to find the right price and the right timing and this depended greatly on the stage of development of the companies in which it has invested, and that the timing and size of investments in new businesses was likewise uncertain. As things turned out, consolidated revenues and earnings both finished the year down, this was due largely to fewer sales of operational investment securities at its Incubation business, which at roughly JPY400mn for the year was JPY3.5bn less than the previous year. At its mainstay e-commerce business, both net sales and operating profit finished the year higher on the back of a 28.2% increase in gross merchandise value handled.

The company did not provide guidance for FY09/22 consolidated results at the time of its FY09/21 results announcement, explaining that the timing of sales of operational investment securities held under its Incubation business was still uncertain, as it depended on the stage of development of the companies in which it has invested, and that the timing and size of investments in new businesses was uncertain. The drop in revenues and earnings was attributed largely to fewer sales of operational investment securities, roughly by JPY400mn for the year, which was JPY3.5bn less than the previous year. Total merchandise value increased 28.2% YoY. Both revenue and operating profit rose in its mainstay E-Commerce business.

Medium-term outlook

The company had not released a medium-term plan. Instead, in December 2016, BEENOS announced the medium-term target of gross merchandise value of JPY100bn in three to five years (no clear time horizon). This is approximately 2x the FY09/20 level of JPY50.4bn. The company aims to achieve sustained growth driven by further expansion in the cross-border e-commerce business and the creation of new businesses.

BEENOS aspires to “create a global platform to bridge Japan and the world.” It views cross-border challenges (different languages, prices, exchange rates, logistics) as business opportunities, and aims to establish a setting whereby Japanese companies can easily sell their products overseas and create markets that increase their distribution by leveraging IT.

To attain the medium-term target, BEENOS seeks to add more value to existing services and differentiate itself from rivals. In the Global Commerce sub-segment of the E-Commerce Business, the company has been providing information on the lowest prices on global products and building a service that pre-confirms international shipping charges and customs duties at the time of purchase, and in FY09/18 it introduced a system for providing pre-confirmation of shipping charges. In addition, the company began uniformly charging JPY300 per payment in November 2019 (the previous system charged commission of 5% of the total price of goods). With this change, the average unit price spent on goods increased more than 20%. The increased unit price appears to be making a greater contribution to the growth of gross merchandise value than the number of purchases. The company also expanded international delivery methods specific to each region in addition to the international express mail service (EMS) with Japan Post, its partner in most countries and regions. As well, the company is forming alliances with major domestic and overseas online shopping platforms to enhance and differentiate its services.

In the Value Cycle business, the company is building a cross-border distribution system in two categories (brand-name products and alcoholic beverages) with the goal of raising the ratio of overseas revenue to total revenue to more than 50%. In January 2020, it made Defactostandard, the core company of the Value Cycle business, a wholly owned subsidiary to progress business reforms in cost reduction and purchasing methods.

In the Entertainment business, the company is building an e-commerce sales platform that specializes in the needs of the industry. BEENOS sees growth potential in Japanese content such as anime, which is popular in Japan and overseas and thus offers possibilities for global merchandise and services.

In the Incubation business, companies that BEENOS has invested in have grown to the stage of forming potential business alliances with BEENOS or becoming collaboration partners. In creating new businesses, the company plans to invest with a medium-term perspective and launch companies quickly, fostering new earnings pillars.

Business

Business model

Online cross-border transactions

BEENOS facilitates online cross-border transactions by offering support for translating websites, settling exchange rates, arranging shipping, and providing customer service. The company earns service fees when shoppers pay for goods. BEENOS has two segments: E-Commerce (roughly 85.2% of revenue, OPM of 7.7%) and Incubation (14.8% of revenue, OPM of 64.4%).

E-Commerce comprises the three following businesses according to items handled and service structure:

Global Commerce: Overseas forwarding and proxy purchasing (main operators: tenso, inc. and Shop Airlines, Ltd.)
Value Cycle: Purchasing and selling of brand-name items, apparel, and alcohol (main operators: Defactostandard, Ltd. and JOYLAB, inc.)
Entertainment: Turning content based on media personalities and popular Japanese anime and game characters into merchandise and selling it online (main operator: monosense, Ltd.)

These services all provide users in Japan and overseas with marketplaces for buying products online. However, they differ by structure and items handled.

BEENOS’ core consolidated subsidiaries operate these businesses, as outlined below.

Business category		Company		Main business	% of group (FY09/20)
Business category		Company		Main business	Revenue	Operating profit
E-Commerce	Global Commerce		tenso, inc.	Overseas forwarding and proxy purchasing	22.8%	40.4%
			Tenso UK Ltd.	Proxy purchasing
			Taiwan Tenso, Inc.	Proxy purchasing
			Shop Airlines, Ltd.	Global shopping
			Shop Airlines America, Inc.
			Shop Airlines Europe B.V.
	Value Cycle		Defactostandard, Ltd.	Online purchasing and sales of brand-name and apparel items	46.9%	-
	Value Cycle		JOYLAB, inc.	Purchasing and sales of alcoholic beverages	46.9%	-
	Entertainment		monosense, Ltd.	Merchandise planning and licensing	15.5%	-
	Entertainment		monosense, Ltd.	Merchandise planning and licensing	15.5%	-
Incubation			BeeCruise inc.	New businesses	14.8%	59.3%
			FASBEE inc.
			BEENOS Travel Inc.
			BEENOS Entertainment Inc.
			BEENOS Marketing Asia Inc.
			BEENOS HR Link Inc.
			BEENOS Asia Pte. Ltd.	Investment and cultivation
			BEENOS Partners Ltd.	Investment and cultivation

Source: Shared Research based on company data

Relationship between gross merchandise value and revenue in e-commerce

Even among e-commerce services that use a marketplace business model, gross merchandise value and revenue may differ. Gross merchandise value is the total transaction amount for all products, the overall value of products flowing through the company’s businesses. BEENOS operates e-commerce sites, but not all these sites sell the company’s own products. Some sites simply support e-commerce transactions. In these cases, gross merchandise value corresponds to the price of products customers buy plus shipping fees but is not related to BEENOS’ revenue. Still, general trends in gross merchandise value can suggest the level of growth in products BEENOS’ sites handle.

In the Value Cycle business, BEENOS buys used goods, and if the items are sold at auction, they generate revenue for BEENOS. Thus, GMV and revenue are the same amount.

Gross merchandise value and revenue (consolidated)

(JPYmn)	FY09/16		FY09/17		FY09/18		FY09/19		FY09/20
(JPYmn)	GMV	Revenue	GMV	Revenue	GMV	Revenue	GMV	Revenue	GMV	Revenue
Cross Border	21,559	3,839	21,324	4,153	23,132	4,504	24,651	4,929	29,702	5,926
Value Cycle	9,627	9,627	10,514	10,514	12,424	12,424	13,165	13,165	12,180	12,181
Retailing and Licensing	10,334	4,556	10,537	5,067	10,798	4,636	12,538	4,937	8,226	4,011
Incubation	0	1,203	0	977	23,147	1,206	17	2,259	329	3,842
Total	41,520	19,225	42,375	20,711	46,370	22,768	50,390	25,277	50,439	25,873

Source: Shared Research based on company data
Note: Since Value Cycle involves only the sale of goods, GMV and revenue are the same amount.

E-Commerce (Global Commerce)

Two core subsidiaries operate in the Global Commerce business: tenso and Shop Airlines. tenso helps overseas customers make purchases on Japanese e-commerce sites; Shop Airlines targets Japanese customers who want to buy products on overseas online auction sites (eBay). With tenso, Japanese products flow overseas (the “from Japan” business); with Shop Airlines, the direction is reversed (the “to Japan” business).

tenso

tenso serves as a platform connecting overseas customers with Japanese sites not set up to handle multiple languages, overseas shipping, or other support for overseas customers; the customers would otherwise be unable to purchase items from those Japanese sites. tenso offers overseas customers two services: tenso.com (overseas forwarding business) and Buyee (proxy purchasing business).

tenso.com: Overseas package forwarding

Overseas customers that become tenso.com members are provided with a provisional Japanese postal address, allowing delivery by Japanese e-commerce sites that do not ship overseas (and thereby providing Japanese e-commerce operators with an additional sales route without their needing to alter their operations or extra expenses). Overseas customers conduct purchases directly on Japanese e-commerce sites, so it is assumed they can comprehend Japanese, perhaps via translation tools.

Service structure is as follows:

The overseas customer registers as a tenso.com member if the Japanese e-commerce site they wish to use does not ship overseas.
tenso.com provides the overseas customer with a Japanese shipping address. The customer purchases items on the Japanese site, specifying the Japanese address for shipping. As such, overseas customers can purchase items even on Japanese e-commerce sites which do not ship overseas.
Overseas users directly purchase items on Japanese e-commerce sites and specify the Japanese address provided by tenso.com as shipping address.
Items are shipped to the address, which is the company’s warehouse in Japan.
tenso.com ships purchased items from its warehouse to the member’s registered postal address overseas.

The company also offers a service where multiple purchases from various Japanese e-commerce sites can be bundled for delivery overseas in accordance with customer instructions.

How tenso.com operates

Source: Shared Research based on company data

Buyee: Proxy purchasing

Buyee differs from tenso.com in that customers do not make purchases directly on Japanese e-commerce sites. Instead, Buyee receives information on products handled by partner Japanese e-commerce sites, and translates that information into English and Chinese. Customers then make purchases on the Buyee site. Service structure of Buyee is as follows:

Buyee forms alliances with Japanese e-commerce sites and receives product information listed on those websites (such as product images, prices, and quantities in stock). This information is translated into English and Chinese and placed on Buyee’s site, which handles sales and payment processing.
An overseas customer places an order on Buyee’s site.
Buyee places that order on the affiliated Japanese e-commerce site (proxy purchasing).
Furthermore, using the “Add to Buyee” service, a customer can add to the Buyee shopping cart any product on a Japanese e-commerce site allied with Buyee.
Buyee receives the purchased item at its designated address in Japan (address of a Buyee warehouse).
The item purchased on Buyee’s site is shipped to the overseas customer.

From July 2020, the company also made it easier for online sellers in Japan to make their products available overseas through the launch of its Buyee Connect service, simply by installing a few lines of tags (tracking codes) on the seller’s website. Overseas customers can shop using a multilingual shopping cart and make payments on Buyee using typical methods used internationally such as PayPal, Alipay, and UnionPay credit cards.

How Buyee operates

Source: Shared Research based on company data

Overseas customers who don’t understand Japanese can use Buyee’s site to purchase items from Japan since the product information is translated into other languages. Affiliated e-commerce sites do not sell directly to overseas customers and do not need to modify their sites; Buyee provides them with a sales route to reach overseas customers who do not understand Japanese.

Buyee’s portal site