Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.

2. Features and Strengths.

(1) Brand Power.

The biggest feature of CUBE <7112> is its specialization in the luxury golf wear market targeting affluent customers, establishing its own brand "MARK&LONA". It has been over 15 years since the brand was established and it can be said that it has created the luxury golf wear market through unique collaborations developed every season. The company is a global leader in luxury golf apparel and it is not easy for other competitors in the same industry to catch up. We see this brand power and positioning as the company's biggest strengths.

(2) High Stock Turnover Rate.

One of the indicators that is commonly emphasized in the retail industry is the stock turnover rate. It is one of the indicators that represents the efficiency of inventory investment and is used to grasp appropriate inventory levels. It is calculated by multiplying the stock turnover rate by the gross profit margin. In the retail industry, a stock turnover rate of 200% or more is generally considered favorable.

In the case of this company, the inventory turnover rate for the fiscal year ending in December 2023 is 12.5 times, and the gross profit margin is 56.7%, resulting in a stock turnover rate of 708.8%, which is extremely high. The company is able to maintain a high gross profit margin while maintaining appropriate inventory levels, indicating a strong financial foundation. This will be a significant strength in the company's future business expansion. The company achieves proper inventory management by conducting analysis of past trends in the economy and sales, forecasting future sales based on this analysis, and placing appropriate orders (manufacturing instructions) accordingly. This is the company's unique expertise and can also be considered a strength. However, it can also be said that the company is able to maintain a high gross profit margin and appropriate inventory levels because its business scale is still small (with revenue of less than 10 billion yen). It remains to be seen whether the company can maintain the current high stock turnover rate level as its revenue expands to 20 billion yen or 30 billion yen in the future.

3. Competitors

As the company sells clothing and other clothing, all clothing manufacturers could be considered competitors in a broad sense. However, the company specializes in the luxury golfwear market, so there are no competitors in this market. Furthermore, looking at a slightly broader market, we believe that Moncler, Descente <8114>, Snow Peak <7816>, and others who sell outdoor products and sporting goods could also be competitors. However, as clothing is also a matter of personal taste, in a sense, the biggest competitor can be considered to be the "user's preference". In order to respond to changes in user preferences, the company is expanding a wide range of categories and continuing various projects and collaborations, which is deserving of praise.

(Written by FISCO guest analyst Noboru Terashima)