■BeeX＜4270＞'s growth strategy

1. Business environment

The DX and cloud-related markets are expected to expand in the medium to long term due to the growing demand for cloudification and modernization of core systems. Furthermore, a significant tailwind for the company is that the standard support for SAP's current flagship on-premises product "SAP ERP 6.0" and the bundled "SAP Business Suite" will end in 2027 and extended support will end in 2030. As a result, users utilizing these products will be compelled to migrate to the cloud and to SAP's next-generation ERP product "S/4HANA." Additionally, new versions of "S/4HANA" are released annually, requiring upgrades on a 5-7 year cycle, leading to continued demand for upgrades. The demand for cloudification of SAP systems, which the company excels at, is expected to become more pronounced in the future, and not only is revenue growth from cloud integration anticipated due to the large-scale system cloud migration demand, but it is also expected to lead to the subsequent stock-type revenue from cloud license resale and MSP.

2. Expanding contracts and promoting high-value-added services

Although the company has not announced a mid-term management plan, it aims to ensure continuous revenue growth by expanding contracts for existing services through strategies such as increasing recognition, developing sales channels, and cross-selling/up-selling, while also working to enrich high-value-added new services such as building platforms and application development to realize DX, as well as expanding new services in cloud license resale and MSP.

Regarding SAP systems, as mentioned, the demand for migration to the cloud is expected to become full-scale in the future, and the support system for cloudification and S/4HANA will be strengthened. In building platforms and developing applications to realize DX, enhancing the construction of data analysis and integration infrastructure, which is crucial for achieving DX, and developing modern applications utilizing generative AI will be prioritized. An example of an implementation case for building a data integration infrastructure is Lotte. Support was provided for the internalization of application development and engineering training through the connection of core business systems and sales planning.

In the fields of cloud license resale and MSP, the company is promoting the addition of new functions and services, expanding services in three categories (observability, security, automation) to promote DX through its multi-cloud managed service "BeeXPlus."

In the security-related services, a partnership agreement was signed in May 2023 with the USA's leading company in the cloud security field, Okta, Inc., to start support services for the implementation of identity management solutions for employees, "Okta Workforce Identity Cloud," and for customers, "Okta Customer Identity Cloud."

In the field of observability, previous services were limited to monitoring whether the system was functioning properly. However, it is now required to monitor whether services can be continuously provided and to understand the causes of anomalies when they occur (a state of having observability). Therefore, in August 2023, a partnership agreement was signed with New Relic, a leading company in the observability field from the usa, and the provision of sap se-sponsored adr observability services has commenced.

Additionally, as a new service supporting corporate cloud migration and DX promotion, a "Generative AI Environment Building Support Service" will be launched in April 2024, enabling companies to utilize generative AI safely and efficiently. Based on Azure OpenAI Service, this service will assist in accelerating information gathering and significantly improving operational efficiency. In June 2024, the "AWS Cloud Support Service" will start. This service is composed of three services (Continuous Improvement Service, FinOps Practice Support Service, and In-house Support Consulting) that comprehensively support system improvements, in-house development and operations after cloud migration for enterprise companies, contributing to the utilization of cloud and the promotion of DX.

3. Shareholder Return Policy

Regarding the shareholder return policy, the basic policy is to implement stable and continuous profit returns to shareholders, taking into account performance, business environment, etc. However, as the company is currently in a growth phase, it is determined that prioritizing the securing of necessary internal reserves for future business development and strengthening financial health will lead to the greatest benefit for shareholders, and since its establishment, dividends have not been implemented. The possibility of future dividend implementation and the timing have not yet been determined.

4. Sustainability Management

Although no specific materiality has been established for sustainability management at this time, the aim is to contribute to the realization of a sustainable society through the utilization and implementation of advanced technology. A Sustainability Promotion Council composed of members from the management meeting has been established. Recognizing investment in human capital as an important issue, the policy is to promote investment and training in human capital through active recruitment, providing growth opportunities, enhancing human resources, evaluation, and compensation systems, and health management.

Evaluating High Growth

5. Our Perspective

Since its establishment in March 2016, the company has achieved a revenue scale of 7.7 billion yen and an operating profit and ordinary profit scale of 0.6 billion yen by the fiscal year ending February 2024 across eight periods. The company has also obtained the top-tier certification as "AWS Premier Service Partner" in the APN. Considering the favorable business environment and the inheritance of Telus's AWS business, the continuation of this high growth can be seen as a demonstration of the company's strengths as a professional group specialized in cloud technology, and we highly evaluate this. Future challenges include building a system to respond to increased demand through recruitment and development of talent, and improving profit margins through the expansion of high value-added services. However, the company has indicated its intention to consider M&A and alliances to expand revenue, and we would like to focus on the progress of the management strategy to maintain high growth.

(Authored by FISCO guest analyst Masanobu Mizuta)