The Monogatari Corporation (3097)walden.co.jp/pdf/3097_monogatari_english.pdf1 URL: Written by Yoshiyuki Muroya E-mail: [email protected] Phone：+81 3 3553 3769 The Monogatari

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URL: www.walden.co.jp

Written by Yoshiyuki Muroya

E-mail: [email protected]

Phone：+81 3 3553 3769

The Monogatari Corporation (3097)Parent Fiscal Year Sales OP RP NP EPS DPS BPS

(Million Yen) (Yen) (Yen) (Yen)

FY06/10 12,781 982 1,001 506 136.8 16.7 632.4

FY06/11 15,745 1,195 1,230 530 124.2 21.0 816.8

FY06/12CoE 18,847 1,478 1,500 763 154.5 22.0 -

FY06/11 YoY 23.1% 21.6% 22.8% 4.6% - - -

FY06/12CoE YoY 19.7% 23.7% 21.8% 43.9% - - -

Parent Half Year Sales OP RP NP EPS DPS BPS


Q1 to Q2 FY06/11 7,732 714 732 340 - - -

Q3 to Q4 FY06/11 8,013 481 498 190 - - -

Q1 to Q2 FY06/12CoE 8,935 636 650 323 - - -

Q3 to Q4 FY06/12CoE 9,912 842 850 440 - - -

Q1 to A2 FY06/12CoE YoY 15.5% (10.9%) (11.2%) (4.8%) - - -

Q3 to Q4 FY06/12CoE YoY 23.7% 75.1% 70.7% 131.6% - - -

Parent Quarter Sales OP RP NP EPS DPS BPS


Q1 FY06/11 3,824 334 341 125 - - -

Q2 FY06/11 3,908 380 391 215 - - -

Q3 FY06/11 4,001 331 343 179 - - -

Q4 FY06/11 4,012 150 155 11 - - -

Q1 FY06/11 YoY 21.4% 10.2% 10.4% (22.8%) - - -

Q2 FY06/11 YoY 33.1% 194.6% 187.5% 283.9% - - -

Q3 FY06/11 YoY 21.0% 28.8% 29.9% 31.6% - - -

Q4 FY06/11 YoY 18.5% (48.8%) (46.9%) (92.8%) - - -

Source: Company Data, WRJ Calculation

1.0 Executive Summary (6 September 2011)

Ongoing Growth by Developments of New Formats

The Monogatari Corporation is seeing steady earnings growth. In FY06/2012, the Company is expected to

see some 20% YoY earnings growth, two years in a row. The Company, in charge of developing new formats

for its businesses, is mainly involved with running roadside chain stores for Korean Barbecue, Noodle Soup

and Japanese Pancake restaurants, nation-wide. As of the end of FY06/2011, the collective number of stores

stood at 213, in which the core part was accounted for by Korean Barbecue, comprising brands like

“Yakiniku King”. Here did the Company develop and launch a new format of “all-you-can-eat, served at

table”, which has been so well accepted by consumers, and this has massively contributed to the Company’s

performance in FY06/2011, in which sales, on a comparable basis, rose 7.9% YoY.

Going forward, it will be difficult to further pursue high sales growth on a comparable basis, but new

openings of stores, collectively as many as 48, will contribute to increases in sales and earnings with the

Company, in FY06/2012. The key driver for such increases will again come from the Korean Barbecue side.

“All-you-can-eat, served at table” is now being established as a format that would surely post decent sales,

and thus, the Company’s basic strategy is to keep on opening new stores based on this format in

high-customer-density areas. In this format, it cannot be avoided that the gross profit margins are relatively

lower than the average with the Company, in a respect that this is “all-you-can-eat”. Meanwhile, there are

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external factors like hiking costs for procuring food materials & ingredients and for fuel etc., and they are to

negatively affect to gross profit margins with the Company. Still, the Company’s business model is expected

to see marginal improvements with its profit margins in FY06/2012 over FY06/2011, given that costs

associated with large-scale refurbishments & renovation on existing stores’ facilities in FY06/2011 will not

reappear in FY06/2012 and that startup of own noodle manufacturing facilities is to cutback the Company’s

costs on a net basis.

Even longer-term, the Company believes that it should be able to maintain some 20% YoY earnings growth.

Over the past six years in a row, the Company has achieved increases in sales and earnings. According to the

Company, it has never tried for excess investments in new store openings, and this is one of the key reasons

why the Company has kept on seeing increases in sales and earnings every year. Even after this, the

Company believes that it is a good timing now to aggressively increase the number of new store openings.

This is because the Company believes in high performance of “all-you-can-eat, served at table” in the

foreseeable future, as well as in developments of such successful new formats in other segments like Noodle

Soup in the near future. The Company calls for collective 369 stores under management as of the end of

FY06/2014 versus 213 stores as of the end of FY06/2011.

2.0 Company Profile

Running Korean Barbecue Chain Restaurant Stores

Company Name The Monogatari Corporation

Website (Japanese, English)

IR Information (Japanese, English)

Share Price (Japanese, English)

Established 4 September 1969

Listing 27 June 2011 (TSE1: Ticker 3097)

Capital ¥1,060m (as of the end of June 2011)

No. of Shares 4,935,182 shares, including treasury of 714 shares (as of the end of June 2011)

Main Features Running roadside chain restaurant stores for Korean Barbecue, Noodle Soup

and Japanese Pancake, in Aichi-pref. as well as nationwide

Developing new formats, aggressively opening new stores

Focus on “all-you-can-eat”

Business Contents Ⅰ. Korean Barbecue

Ⅱ. Noodle Soup

Ⅲ. Japanese Pancake

Ⅳ. Specialty Store

Ⅴ. Franchise

Top Management President: Yoshio Kobayashi

Shareholders Yoshio Kobayashi 15.0%, Yusuke Kobayashi 11.9% (as of the end of June 2011)

Headquarters Toyohashi, Aichi-pref. JAPAN

No. of Employees Parent: 427 (as of the end of June 2011)

Source: Company Data

http://www.monogatari.co.jp/http://www.monogatari.co.jp/ir/index.phphttp://www.stockweather.co.jp/sw2/detail.aspx?code=3097&m=1http://www.bloomberg.com/apps/quote?ticker=3097:JP

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3.0 Recent Trading & Prospects

FY06/2011 Results

In FY06/2011 results, sales came in at ¥15.7bn (up 23.1% YoY), operating profit ¥1.2bn (up 21.6%),

recurring profit ¥1.2bn (up 22.8%) and net profit ¥0.5bn (up 4.6%). Compared with the latest Company

Forecasts, sales were exceeded by 3.7%, operating profit 10.3%, recurring profit 11.3% and net profit 1.5%.

While sales on a comparable basis rose 7.9% YoY, new store openings were well feeding through, and thus

the Company saw a robust growth with sales. By segment, the mainstay Korean Barbecue contributed to

sales increases most significantly. Here were sales driven by increasing demand for “all-you-can-eat, served

at table” of “Yakiniku King” that carries relatively lower margins than the average, and the overall gross

profit margins with the Company inevitably suffered from a 1.6% point deterioration to 69.6% from 71.2% in

the previous year.

The thing is that the Company places more emphasis upon increases of absolute value of earnings rather

than the pursuit for higher profit margins, and thus such levels of gross profit margins contractions should

be of something intentional. At the extraordinary levels, the Company reported increased extraordinary

losses than usual, and this is the key reason why the Company saw low growth on the net profit side. The

Company has been continuously closing down bad-performance existing stores and/or applying to them new

formats etc., and the fact that the Company did so more drastically in FY06/2011 led to increased costs at

the extraordinary levels. As a result of this, the Company should be starting with a more efficient state for

overall stores in FY06/2012 than normal years.

Quarterly Sales & Recurring Profit Margins

3,1

51

2,9

37

3,3

07

3,3

86

3,8

24

3,9

08

4,0

01

4,0

12

4,4

68

4,4

68

4,9

56

4,9

56

9.8%

4.6%

8.0% 8.6%8.9%

10.0%8.6%

3.9%

7.3% 7.3%8.6% 8.6%

(6.0%)

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

Q1

FY06

/10

Q2

FY06

/10

Q3

FY06

/10

Q4

FY06

/10

Q1

FY06

/11

Q2

FY06

/11

Q3

FY06

/11

Q4

FY06

/11

Q1

FY06

/12

Q2

FY06

/12

Q3

FY06

/12

Q4

FY06

/12

Sales (Million Yen)

RPM (%)

Source: Company Data, WRJ Calculation (quarterly figures are estimated by H1 and H2 Company Forecasts equally divided

into two)

On a quarterly basis, it should be spotted that earnings in Q4 came down sharply, although this is to be

one-off. In Q4, the Company saw concentration of costs associated with new store openings and

refurbishments of existing stores, while the Company suggests that it maintained recurring profit margins

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in Q4 over Q3 when such one-off issues are excluded. In fact, the gross profit margins in Q4 came in at 69.6%,

roughly the same as in Q1, Q2 and Q3, confirming that irregular issues at the SG&A levels made one-off

adjustments in terms of recurring profit margins.

Meanwhile, it is also noteworthy that the Company’s financial state has been continuously improving to

date. Net-debt-equity ratio stood at 530.4% as of the end of FY06/2007, suggesting an exceptionally high

gearing with the Company, while the Company saw some net cash, albeit small, as of the end of FY06/2011.

It is too difficult for the Company, investing some ¥80m per store to run a company store (on a simple

average basis), to continue enjoying rich net inflow in terms of free cash flow, but the Company has steadily

and consistently reduced its exposure to interest-bearing debts.

Changes in Company Forecasts & Results

Parent Fiscal Year Date Event Sales OP RP NP

(Million Yen)

FY06/11CoE 11-Aug-10 Q4 Results 15,187 1,083 1,105 522

FY06/11CoE 09-Nov-10 Q1 Results 15,187 1,083 1,105 522

FY06/11CoE 10-Feb-11 Q2 Results 15,187 1,083 1,105 522

FY06/11CoE 09-May-11 Q3 Results 15,187 1,083 1,105 522

FY06/11Act 11-Aug-11 Q4 Results 15,745 1,195 1,230 530

Amount of Gap 558 112 125 8

Rate of Gap 3.7% 10.3% 11.3% 1.5%

Parent Half Year Date Event Sales OP RP NP

(Million Yen)

Q1 to Q2 FY06/11CoE 11-Aug-10 Q4 Results 7,176 320 334 116

Q1 to Q2 FY06/11CoE 09-Nov-10 Q1 Results 7,176 320 334 116

Q1 to Q2 FY06/11Act 10-Feb-11 Q2 Results 7,732 714 732 340

Amount of Gap 556 394 398 224

Rate of Gap 7.7% 123.1% 119.2% 193.1%

Parent Half Year Date Event Sales OP RP NP

(Million Yen)

Q3 to Q4 FY06/11CoE 11-Aug-10 Q4 Results 8,011 763 771 406

Q3 to Q4 FY06/11CoE 09-Nov-10 Q1 Results 8,011 763 771 406

Q3 to Q4 FY06/11CoE 10-Feb-11 Q2 Results 7,455 369 373 182

Q3 to Q4 FY06/11CoE 09-May-11 Q3 Results 7,455 369 373 182

Q3 to Q4 FY06/11Act 11-Aug-11 Q4 Results 8,013 481 498 190

Amount of Gap 558 112 125 8

Rate of Gap 7.5% 30.4% 33.5% 4.4%


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Sales by Segment (On A Quarterly Basis)

0

500

1,000

1,500

2,000

2,500

Q1FY06/10

Q2FY06/10

Q3FY06/10

Q4FY06/10

Q1FY06/11

Q2FY06/11

Q3FY06/11

Q4FY06/11

Korean Barbecue

Noodle Soup

Japanese Pancake

Specialty Store

Franchise

(Million Yen)


Monthly Sales Trends

21

.6%

20

.4%

19

.8%

35.8

%

23.4

%

26

.9%

28.

2%

28

.1%

13

.6%

26

.2%

19

.5%

19.

4%

17

.7%

14.9

%

9.7

%

11.

2%

28

.1%

16.1

%

16.

8%

19

.6%

11

.9%

(5.9

%)

5.4

%

4.7

%

(1.0

%)

(0.6

%)

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

Jul-1

0

Au

g-1

0

Sep

-10

Oct

-10

No

v-1

0

De

c-1

0

Jan

-11

Feb

-11

Ma

r-1

1

Apr

-11

Ma

y-1

1

Jun

-11

Jul-1

1

Sales (YoY)

Korean Barbecue (comparable, YoY)


FY06/2012 Company Forecasts

In FY06/2012, the Company calls for prospective sales ¥18.8bn (up 19.7% YoY), operating profit ¥1.5bn (up

23.7%), recurring profit ¥1.5bn (up 22.0%) and net profit ¥0.8bn (up 43.9%). Sales, on a comparable basis,

having had seen a high 7.9% YoY growth in FY06/2011, are to inevitably suffer from substantial

adjustments in terms of growth rates in the following year, i.e., FY06/2012. Company Forecasts assume a

0.2% YoY growth for sales on a comparable basis. Still, overall sales with the Company are expected to rise

some 20% YoY, due to the effect of new store openings. The number of new stores to be opened is expected to

be 48, while the Company is to close down 5 stores in FY06/2012, implying net increases of 43 stores in

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FY06/2012. The net increases in the number of stores came in at 30 in FY06/2011, and thus the effect of new

store openings in FY06/2012 will be larger than that of FY06/2011.

By segment, Korean Barbecue will be the key driver for overall sales increases with the Company, as in

FY06/2011. Prospective net increases in sales with the Company are ¥3.1bn YoY, of which ¥2.1bn (69% of

total) is expected to be accounted for by Korean Barbecue, ¥0.5bn (17%) by Noodle Soup and ¥0.4bn (13%)

by Franchise.

Currently is the Company under pressure from external factors including procurement cost increases as a

result of hiking prices for food materials & ingredients and increasing charges of utilities, as a result of

hiking crude oil prices. On top of this, further increases of exposure to Korean Barbecue in terms of sales

should lead to a deterioration of sales mix, as this segment carries less-than-average gross profit margins. In

spite of all these negative factors, however, Company Forecasts assume gross profit margins 69.4%, almost

unchanged from 69.6% in FY06/2011. One of the key factors to be mentioned is that Franchise (royalty

incomes etc. from franchisees), carrying higher-than-average gross profit margins, is expected to account for

increased proportion of overall sales with the Company, giving positive impacts to sales mix. Meanwhile, the

Company is starting up a factory to process noodles, for own consumption, and this is expected to reduce

costs with the Company, on a net basis. Together with these positive factors, the Company is expected to see

minimal deterioration with its gross profit margins.

As mentioned, the Company reported large-scale refurbishment costs for renovating existing stores etc., in

FY06/2011, to a more substantial extent than regular years, particularly in Q4, while this is not expected to

reappear two years in a row. On top of this, the Company suggests that costs for physical distribution should

be reduced, and thus SG&A costs, as a ratio to sales, are expected to come down. The extent of this is

expected to be larger than the extent of deterioration of gross profit margins, eventually calling for marginal

increases in operating profit margins.

At the extraordinary levels, it is also expected that the Company will not suffer from reappearing irregular

costs. Extraordinary balance came in at negative ¥151m in FY06/2011, larger than regular years, due to

aggressive format changes at existing stores etc., while this is expected to come in at negative ¥60m. It

should be noticed that the Company made a decent progress with operations to improve efficiency over the

whole stores under management

In FY06/2012, the Company has a plan to deliver ¥22.0 per share as divided with shareholders (payout

ratio: 14.2%). Compared with ¥21.0 per share (16.9%) in FY06/2011, this suggests that the Company is to

raise its dividend per share, but payout ratio is to come down. The levels of payout ratio are not very high, as

the Company admits, but the current levels should be almost acceptable, when the Company’s current

business model is taken into account. The Company is in a state where it is aggressively investing in

operations with ROE almost 20%. Rather than increasing outflow of cash by raising dividend per share, it

should be more beneficial to shareholders, longer term, for the Company to spend more on investing in its

profitable operations.

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Sales by Segment (Cumulative, Quarterly)

Sales by Segment Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act

Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 YoY

(Million Yen) 06/2010 06/2010 06/2010 06/2010 06/2011 06/2011 06/2011 06/2011 Net Chg.

Korean Barbecue 1,617 3,092 4,848 6,735 2,096 4,139 6,295 8,481 +1,746

Noodle Soup 592 1,161 1,786 2,371 741 1,529 2,340 3,086 +715

Japanese Pancake 420 804 1,210 1,607 445 906 1,387 1,879 +272

Specialty Store 145 320 486 635 155 347 514 682 +47

Franchise 375 706 1,057 1,422 385 807 1,194 1,617 +195

Sales 3,151 6,088 9,395 12,780 3,824 7,732 11,733 15,745 +2,965

Korean Barbecue 51% 51% 52% 53% 55% 54% 54% 54% -

Noodle Soup 19% 19% 19% 19% 19% 20% 20% 20% -

Japanese Pancake 13% 13% 13% 13% 12% 12% 12% 12% -

Specialty Store 5% 5% 5% 5% 4% 4% 4% 4% -

Franchise 12% 12% 11% 11% 10% 10% 10% 10% -

Sales 100% 100% 100% 100% 100% 100% 100% 100% -

Korean Barbecue - - - - +29.6% +33.9% +29.8% +25.9% 59%

Noodle Soup - - - - +25.2% +31.7% +31.0% +30.2% 24%

Japanese Pancake - - - - +6.0% +12.7% +14.7% +16.9% 9%

Specialty Store - - - - +6.9% +8.4% +5.7% +7.4% 2%

Franchise - - - - +2.7% +14.3% +12.9% +13.7% 7%

Sales - - - - +21.4% +27.0% +24.9% +23.2% 100%

Sales by Segment Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY


Korean Barbecue 1,617 1,475 1,756 1,887 2,096 2,043 2,156 2,186 +299

Noodle Soup 592 569 625 585 741 788 811 746 +161

Japanese Pancake 420 384 406 397 445 461 481 492 +95

Specialty Store 145 175 166 149 155 192 167 168 +19

Franchise 375 331 351 365 385 422 387 424 +59

Sales 3,151 2,937 3,307 3,385 3,824 3,908 4,001 4,012 +627

Korean Barbecue 51% 50% 53% 56% 55% 52% 54% 54% -

Noodle Soup 19% 19% 19% 17% 19% 20% 20% 19% -

Japanese Pancake 13% 13% 12% 12% 12% 12% 12% 12% -

Specialty Store 5% 6% 5% 4% 4% 5% 4% 4% -

Franchise 12% 11% 11% 11% 10% 11% 10% 11% -

Sales 100% 100% 100% 100% 100% 100% 100% 100% -

Korean Barbecue - - - - +29.6% +38.5% +22.8% +15.8% 48%

Noodle Soup - - - - +25.2% +38.5% +29.8% +27.5% 26%

Japanese Pancake - - - - +6.0% +20.1% +18.5% +23.9% 15%

Specialty Store - - - - +6.9% +9.7% +0.4% +12.8% 3%

Franchise - - - - +2.7% +27.5% +10.1% +16.1% 9%

Sales - - - - +21.4% +33.1% +21.0% +18.5% 100%


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Income Statement (Cumulative, Quarterly)

Income Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act



Sales 3,151 6,089 9,396 12,782 3,824 7,732 11,734 15,745 +2,963

CoGS 886 1,720 2,686 3,684 1,129 2,321 3,572 4,790 +1,106

Gross Profit 2,265 4,369 6,710 9,098 2,695 5,412 8,162 10,955 +1,857

SG&A 1,961 3,937 6,020 8,115 2,361 4,697 7,116 9,760 +1,645

Operating Profit 304 432 690 983 334 714 1,046 1,195 +212

Non Operating Balance 6 13 20 19 7 18 30 36 +17

Recurring Profit 310 446 710 1,002 341 733 1,076 1,231 +229

Extraordinary Balance (10) (36) (47) (47) (108) (109) (119) (151) (104)

Pretax Profit 299 410 663 955 233 623 956 1,080 +125

Tax Charges etc. 137 191 309 448 108 283 437 550 +101

Net Profit 162 219 355 507 126 340 519 530 +23

Sales YoY - - - - +21.4% +27.0% +24.9% +23.2% -

Operating Profit YoY - - - - +10.0% +65.3% +51.7% +21.6% -

Recurring Profit YoY - - - - +10.1% +64.4% +51.5% +22.8% -

Net Profit YoY - - - - (22.5%) +55.6% +46.4% +4.6% -

Gross Profit Margins 71.9% 71.7% 71.4% 71.2% 70.5% 70.0% 69.6% 69.6% -

(SG&A / Sales) 62.2% 64.7% 64.1% 63.5% 61.7% 60.7% 60.6% 62.0% -

Operating Profit Margins 9.6% 7.1% 7.3% 7.7% 8.7% 9.2% 8.9% 7.6% -

Recurring Profit Margins 9.8% 7.3% 7.6% 7.8% 8.9% 9.5% 9.2% 7.8% -

Net Profit Margins 5.1% 3.6% 3.8% 4.0% 3.3% 4.4% 4.4% 3.4% -

Tax Charges etc. / Pretax Profit 45.9% 46.7% 46.5% 46.9% 46.2% 45.4% 45.7% 50.9% -

Income Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act



Sales 3,151 2,938 3,307 3,386 3,824 3,908 4,001 4,011 +625

CoGS 886 834 966 998 1,129 1,192 1,251 1,218 +220

Gross Profit 2,265 2,104 2,341 2,388 2,695 2,716 2,750 2,793 +405

SG&A 1,961 1,975 2,084 2,095 2,361 2,336 2,419 2,644 +549

Operating Profit 304 128 257 293 334 380 332 149 (144)

Non Operating Balance 6 7 7 (1) 7 11 11 6 +7

Recurring Profit 310 136 264 292 341 392 343 155 (137)

Extraordinary Balance (10) (25) (11) (0) (108) (1) (10) (32) (32)

Pretax Profit 299 110 253 292 233 390 333 123 (168)

Tax Charges etc. 137 54 117 140 108 176 154 113 (27)

Net Profit 162 57 136 152 126 215 179 11 (141)

Sales YoY - - - - +21.4% +33.0% +21.0% +18.5% -

Operating Profit YoY - - - - +10.0% +196.0% +28.8% (49.1%) -

Recurring Profit YoY - - - - +10.1% +188.5% +29.7% (46.8%) -

Net Profit YoY - - - - (22.5%) +279.6% +31.6% (92.9%) -

Gross Profit Margins 71.9% 71.6% 70.8% 70.5% 70.5% 69.5% 68.7% 69.6% -

(SG&A / Sales) 62.2% 67.2% 63.0% 61.9% 61.7% 59.8% 60.4% 65.9% -

Operating Profit Margins 9.6% 4.4% 7.8% 8.7% 8.7% 9.7% 8.3% 3.7% -

Recurring Profit Margins 9.8% 4.6% 8.0% 8.6% 8.9% 10.0% 8.6% 3.9% -

Net Profit Margins 5.1% 1.9% 4.1% 4.5% 3.3% 5.5% 4.5% 0.3% -

Tax Charges etc. / Pretax Profit 45.9% 48.8% 46.3% 47.9% 46.2% 45.0% 46.2% 91.2% -


9

Cash Flow Statement (Cumulative, Quarterly)

Cash Flow Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act



Operating Cash Flow 82 326 515 914 424 1,089 1,366 1,713 +799

Investment Cash Flow (214) (509) (828) (1,014) (204) (378) (684) (1,036) (22)

Operating CF + Investment CF (131) (183) (314) (99) 219 711 682 677 +776

Financing Cash Flow 41 128 67 480 (134) (465) (727) 338 (142)

Pretax Profit 299 410 663 955 233 623 956 1,080 +125

Depreciation 106 222 355 502 130 268 415 570 +69

Working Capital Changes 14 53 85 32 42 113 115 38 +7

Tax Charges (338) (338) (600) (600) (183) (183) (407) (407) +193

Capital Expenditure (192) (470) (802) (977) (168) (353) (621) (927) +51

Free Cash Flow (110) (123) (298) (88) 55 469 460 356 +444

Cash Flow Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act +0



Operating Cash Flow 82 244 189 400 424 666 277 347 (53)

Investment Cash Flow (214) (295) (319) (186) (204) (174) (306) (352) (166)

Operating CF + Investment CF (131) (52) (131) 214 219 492 (29) (5) (220)

Financing Cash Flow 41 87 (61) 413 (134) (331) (262) 1,065 +652

Pretax Profit 299 110 253 292 233 390 333 123 (168)

Depreciation 106 116 132 147 130 138 148 155 +8

Working Capital Changes 14 39 32 (53) 42 70 3 (77) (23)

Tax Charges (338) (0) (261) (0) (183) (0) (224) (0) +0

Capital Expenditure (192) (278) (332) (175) (168) (185) (268) (306) (130)

Free Cash Flow (110) (12) (175) 210 55 414 (8) (104) (314)


Balance Sheet (Quarterly)

Balance Sheet Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act Par.Act +0



Cash & Deposit 1,399 1,434 1,242 1,870 1,956 2,116 1,825 2,885 +1,015

Accounts Receivables 180 189 214 197 195 240 223 206 +9

Securities 92 120 97 107 117 134 108 120 +13

Other 240 260 260 249 268 282 278 387 +137

Current Assets 1,911 2,003 1,813 2,424 2,536 2,773 2,434 3,598 +1,174

Tangible Assets 3,489 3,702 3,867 3,840 3,949 4,050 4,073 4,477 +638

Intangible Assets 72 73 70 70 69 66 81 72 +2

LT Investment Securities etc. 1,715 1,729 1,718 1,724 1,760 1,747 1,780 1,723 (2)

Fixed Assets 5,275 5,503 5,655 5,634 5,778 5,863 5,934 6,272 +638

Total Assets 7,187 7,507 7,468 8,057 8,313 8,636 8,368 9,870 +1,812

Accounts Payable 325 401 435 375 424 558 517 435 +60

Short Term Debt 1,307 1,251 1,314 1,214 1,186 1,116 1,022 990 (224)

Other 919 1,015 874 927 1,055 1,329 1,180 1,622 +694

Current Liabilities 2,551 2,667 2,623 2,516 2,666 3,003 2,719 3,047 +530

Long Term Debt 2,128 2,277 2,185 2,119 2,031 1,775 1,639 1,864 (255)

Other 751 748 740 760 851 870 873 922 +163

Fixed Liabilities 2,879 3,025 2,925 2,878 2,881 2,645 2,512 2,786 (92)

Total Liabilities 5,430 5,693 5,549 5,395 5,547 5,648 5,231 5,833 +438

Shareholders' Equity 1,757 1,814 1,919 2,663 2,767 2,986 3,133 4,031 +1,368

Other 0 0 0 (0) (0) 2 4 6 +6

Net Assets 1,757 1,814 1,920 2,663 2,766 2,988 3,138 4,037 +1,374

Total Liabilities & Net Assets 7,187 7,507 7,468 8,057 8,313 8,636 8,368 9,870 +1,812

Interest Bearing Debt 3,435 3,529 3,500 3,333 3,217 2,891 2,661 2,853 (479)

Net Debt 2,036 2,094 2,257 1,463 1,261 775 836 (32) (1,494)

Days for Inventory Turnover 10 13 9 10 9 10 8 9 -

Quick Ratio 62% 61% 56% 82% 81% 78% 75% 101% -

Current Ratio 75% 75% 69% 96% 95% 92% 90% 118% -

Equity Ratio 24.4% 24.2% 25.7% 33.0% 33.3% 34.6% 37.4% 40.8% -

Net Debt Equity Ratio 115.9% 115.4% 117.6% 54.9% 45.6% 26.0% 26.7% (0.8%) -


10

Long-Term Prospects

According to long-term projections (FY06/2012 to FY06/2014) by the Company, released at its IR meeting on

25 August 2011, the Company goes for sales ¥25.4bn, recurring profit ¥2.1bn and recurring profit margins

8.2% in FY06/2014 versus sales ¥15.7bn, recurring profit ¥1.1bn and recurring profit margins 7.8% in

FY06/2011 results. This means that sales are to rise 62% and recurring profit 69% over the next three years

or recurring profit to rise some 20% YoY over the next three years in a row.

Looking back on the historical trends through FY06/2006 to FY06/2009, the Company’s recurring profit

margins continued edging up every year. Steady increases in sales during the same period led to edging up

volume effect with the Company, in terms of both gross profit margins and of the ratio of SG&A costs to sales.

Most recently, however, the strategy with the Company is to pursue the absolute levels of earnings,

combined with sales enhancement, rather than sticking to the pursuit of higher profit margins. The issue is

enhancing sales as much as possible by aggressively opening new stores in high-customer-density areas

while trying to at least maintain the current levels of profit margins.

By segment, Korean Barbecue is expected to play the most important role with the Company’s strategy.

“All-you-can-eat, served at table” with “Yakiniku King” is now being established as a format to see decent

sales with a very high probability, although profit margins are relatively lower. Thus, the key driver with the

Company’s long-term projections is to go on opening new stores based on this format.

Meanwhile, Noodle Soup is expected to be the second driver. At the moment, sales of this segment is not

seeing growth (on a comparable basis), being exposed to head-on competition with fast food chain stores, in

general, represented by beef bowl chain stores. Nevertheless, near-term developments and launches of new

formats, with this segment, are expected to contribute to the achievements of the Company’s long-term

projections. The other thing is that the Company has a plan to start up its operations in China towards the

end of FY06/2012 by setting up a subsidiary in Shanghai in November 2011 with a ¥224m capital injection.

Long-Term Prospects

8,0

32

8,6

63

10,

119

11,

578

12,

782

15,

745

18,

847

22,

124

25,

430

4.9%

6.1%

7.2%7.7% 7.8% 7.8% 8.0%

8.1% 8.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

0

5,000

10,000

15,000

20,000

25,000

30,000

FY0

6/0

6

FY0

6/0

7

FY0

6/0

8

FY0

6/0

9

FY0

6/1

0

FY0

6/1

1

FY0

6/1

2

FY0

6/1

3

FY0

6/1

4

Sales (Million)

RPM (%)


11

4.0 Business Model

Developing New Formants for Chain Restaurant Stores

The Company is in charge of developing new formats for chain restaurant stores. Concerning Korean

Barbecue (54% of sales in Q4 FY06/2011), Noodle Soup (19%), Japanese Pancake (12%) and Specialty Store

(4%), the Company is running roadside company stores in Aichi-pref. (that includes Toyohashi in which the

Company is based) as well as nationwide, while developing new formats in each segment at a time and

offering them to consumers. In addition to this, the Company is involved with Franchise that accounts for

the remaining 11% of sales and this comprises royalty incomes etc. from franchisees. This segment has a

relatively high gross profit margins some 80% (versus 69.6% for the Company’s gross profit margins in Q4

FY06/2011). As the business model here is to collect fees etc. from franchisees with no trading of food

materials & ingredients, costs of goods sold is small in a respect to the proportion to sales. Meanwhile, gross

profit margins at company stores are estimated at 60% to 65%.

Sales by Segment (Q4 FY06/2011 Results)

54%

19%

12%

4%

11%

Korean Barbecue

Noodle Soup

Japanese Pancake

Specialty Store

Franchise

Source: Company Data

The core part of the Company’s operations is Korean Barbecue, comprising company stores of “Yakiniku

King”, “Ichiban Karubi” and “Ichiban Karubi”. A new format of “all-you-can-eat, served at table” has been

developed and launched for some time, and this had once achieved an astonishing 28.1% YoY sales growth

on a comparable basis (in October 2010) due to its positive impacts to sales. The strengths of the Company

relate to its capability to develop such new formats for chain restaurant stores, to practically carry out such

operations and to eventually make consumers pay for the Company in reality. There is a peer that launched

a format quite similar to the Company’s format of “all-you-can-eat, served at table”, prior to the Company,

currently holding the leading position as far as this category is concerned, in terms of the number of stores

and sales. Meanwhile, the Company suggests that the Company will surely take over the leading position

within a several months time, as a result of aggressive new store openings planned in FY06/2012.

12

On top of Korean Barbecue, the Company is in the process of developing and launching new formats, also,

for other segments. In particular, the issue is crucial in Noodle Soup, as already mentioned, given the largest

exposure to overall sales with the Company, second only to Korean Barbecue.

New Store Openings

As of the end of FY06/2011, the number of stores stood at 213, collectively, while the Company has a plan to

run collective 369 stores as of the end of FY06/2014. Collective 213 stores as of the end of FY06/2011

comprise company stores 115 and franchisees (FC) 116. The core part of company stores relates to Korean

Barbecue 53, while franchisees Noodle Soup 65.

FY End

No

.o

fS

tore

s

(Co

mp

an

yS

tore

)

(FC

)

Ko

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Barb

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e

No

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Jap

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ese

Pan

cake

Sp

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Sto

re

Ko

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Barb

ecu

e

No

od

leS

ou

p

Jap

an

ese

Pan

cake

Sp

ecia

lty

Sto

re

FY06/10 183 83 100 44 18 18 3 22 48 30 0

Q1 FY06/11 189 87 102 45 22 17 3 23 50 29 0

Q2 FY06/11 195 90 105 46 24 17 3 24 54 27 0

Q3 FY06/11 198 91 107 47 24 17 3 24 56 27 0

FY06/11 213 97 116 53 24 17 3 24 65 27 0

Q1 FY06/12 - - - - - - - - - - -

Q2 FY06/12 - - - - - - - - - - -

Q3 FY06/12 - - - - - - - - - - -

FY06/12 256 115 141 63 30 18 4 36 80 25 0

FY06/13 299 - - - - - - - - - -

FY06/14 369 - - - - - - - - - -

New Openings

No

.o

fS

tore

s

(Co

mp

an

yS

tore

)

(FC

)

Ko

rean

Barb

ecu

e

No

od

leS

ou

p

Jap

an

ese

Pan

cake

Sp

ecia

lty

Sto

re

Ko

rean

Barb

ecu

e

No

od

leS

ou

p

Jap

an

ese

Pan

cake

Sp

ecia

lty

Sto

re

Q1 FY06/12 - - - - - - - - - - -

Q2 FY06/12 - - - - - - - - - - -

Q3 FY06/12 - - - - - - - - - - -

FY06/12 +48 +20 +28 +11 +6 +2 +1 +12 +16 +0 +0

Closed

No

.o

fS

tore

s

(Co

mp

an

yS

tore

)

(FC

)

Ko

rean

Barb

ecu

e

No

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Pan

cake

Sp

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Sto

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Ko

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Barb

ecu

e

No

od

leS

ou

p

Jap

an

ese

Pan

cake

Sp

ecia

lty

Sto

re

Q1 FY06/12 - - - - - - - - - - -

Q2 FY06/12 - - - - - - - - - - -

Q3 FY06/12 - - - - - - - - - - -

FY06/12 (5) (2) (3) (1) (0) (1) (0) (0) (1) (2) (0)Source: Company Data, WRJ Calculation

(Company Store) + (FC) (Company Store) (FC)



13

As of the end of FY06/2012, the number of stores is expected to be collective 256. New store openings 48 over

12-month period are to increase the number, while 5 stores are to be closed to decrease the number. The

Company is to basically maintain the trends of FY06/2011 in a respect that Korean Barbecue will be the

mainstay for new store openings on the company store side, while Noodle Soup on the FC side. Going

forward, the number of stores is expected to be collective 299 and 369, respectively, as of the end of

FY06/2013 and FY06/2014, although further details have not been disclosed. Thus, the net increases in the

number of stores, collectively, are 43, 43 and 70, respectively, in FY06/2012, FY06/2013 and FY06/2014.

Stores by Region

With Korean Barbecue, the core part of the Company’s business, it is disclosed that the business has high

exposure to Kanto and Tokai by region, in terms of the numbers of stores, operating 22 stores and 12 stores,

respectively, out of collective 53 stores (as of the end of FY06/2011) across regions in Japan. The idea for the

Company’s new store openings is to do it in the middle of high-consumer-density areas and to hold the

number one position in each. This is the reason why the Company is heavily exposed to Kanto that

incorporates the Tokyo metropolitan areas, while high exposure to Tokai relates to the fact that the

Company is based in Aichi-pref. (Toyohashi) that is a part of Tokai.

Company Stores for Korean Barbecue by Region (Collective 53 Stores, As of The End of FY06/2011)

6

22

2

2

12

3

1

5

0 5 10 15 20 25

Tohoku

Kanto

Shinetsu

Hokuriku

Tokai

Kinki

Shikoku

Kyushu


According to the estimates by the Company, the market for Korean barbecue is some ¥560bn pa in Japan.

One of the characteristics with this is that the market remains fragmented unlike the market for beef bowls

(domestic market some ¥320bn pa in Japan). The Company is one of the largest players in the market for

Korean barbecue in Japan, but sales of Korean Barbecue with the Company in FY06/2011 were no more

than ¥8.5bn. Even when sales of Korean barbecue by its franchisees are included, it should be the case that

the Company holds some 3% share in the market. Given a prospect that the market for Korean barbecue is

unlikely to grow fast in the future, it is an issue for the Company to come up with sensible strategy to

efficiently develop undeveloped areas. Standing on this point, it could be an idea to increase exposure to

regions to which the Company is barely exposed, but the Company, as mentioned earlier, places the biggest

emphasis upon new store openings in high-consumer-density areas for its new store openings.

14

Brands for Each Segment (As of The End of FY06/2011)

Korean Barbecue (3 brands, 77 stores)

“Yakiniku King”: 55 stores (company store 45, FC10), featured by “all-you-can-eat, served at table”

“Ichiban Karubi”: 16 stores (company store 7, FC9), Japanese-style and settled atmosphere produced

“Ichiban Karubi”: 6 stores (company store 1, FC5), featured by pop designs

Noodle Soup (2 brands, 89 stores)

“Marugen Ramen”: 80 stores (company store 18, FC62), featured by specialty dish “Niku Soba”

“Nidaime Marugen”: 9 stores (company store 6, FC3), featured by specialty dish “Kyabeton”

Japanese Pancake (1 brand, 44 stores)

“Okonomiyaki Hompo”: 44 stores (company store 17, FC27), Teppanyaki restaurants, serving steak,

seafood and Japanese pancake

Specialty Store (2 brands, 3 stores)

“Genya”: 1 store (company store 1), high-class Japanese cuisine restaurant, serving food in season and

fresh fish and shellfish

“Genji-Sohonten”: 2 stores (company store 2), large-scale Japanese cuisine restaurant, serving

shabu-shabu and seafood at a time

出所：会社データ

15

5.0 Financial Statements

Income Statement

Income Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE

FY FY FY FY FY FY YoY

(Million Yen) 06/2007 06/2008 06/2009 06/2010 06/2011 06/2012 Net Chg.

Sales 8,663 10,119 11,578 12,782 15,745 18,847 +3,102

CoGS 2,603 3,018 3,430 3,684 4,790 5,760 +970

Gross Profit 6,060 7,101 8,148 9,098 10,955 13,087 +2,132

SG&A 5,487 6,327 7,315 8,115 9,760 11,609 +1,849

Operating Profit 573 775 832 983 1,195 1,478 +283

Non Operating Balance (44) (45) 63 19 36 22 (14)

Recurring Profit 529 730 895 1,002 1,231 1,500 +269

Extraordinary Balance (244) (45) (38) (47) (151) (60) +91

Pretax Profit 285 685 858 955 1,080 1,440 +360

Tax Charges etc. 176 265 404 448 550 677 +127

Net Profit 109 420 454 507 530 763 +233

Sales YoY +7.9% +16.8% +14.4% +10.4% +23.2% +19.7% -

Operating Profit YoY +33.9% +35.1% +7.5% +18.1% +21.6% +23.7% -

Recurring Profit YoY +34.3% +38.0% +22.7% +11.9% +22.8% +21.9% -

Net Profit YoY - +285.5% +8.0% +11.7% +4.6% +43.9% -

Gross Profit Margins 70.0% 70.2% 70.4% 71.2% 69.6% 69.4% -

(SG&A / Sales) 63.3% 62.5% 63.2% 63.5% 62.0% 61.6% -

Operating Profit Margins 6.6% 7.7% 7.2% 7.7% 7.6% 7.8% -

Recurring Profit Margins 6.1% 7.2% 7.7% 7.8% 7.8% 8.0% -

Net Profit Margins 1.3% 4.2% 3.9% 4.0% 3.4% 4.0% -

Tax Charges etc. / Pretax Profit 61.7% 38.6% 47.1% 46.9% 50.9% 47.0% -


Sales by Segment

Sales by Segment Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE



Korean Barbecue 4,948 5,324 5,947 6,737 8,481 10,625 +2,144

Noodle Soup 1,478 1,723 2,112 2,374 3,086 3,600 +514

Japanese Pancake - 1,395 1,653 1,610 1,879 1,889 +10

Specialty Store 1,356 648 631 637 682 719 +37

Franchise 879 1,030 1,235 1,424 1,617 2,012 +395

Sales 8,663 10,119 11,578 12,781 15,745 18,847 +3,102

Korean Barbecue 57% 53% 51% 53% 54% 56% -

Noodle Soup 17% 17% 18% 19% 20% 19% -

Japanese Pancake - 14% 14% 13% 12% 10% -

Specialty Store 16% 6% 5% 5% 4% 4% -

Franchise 10% 10% 11% 11% 10% 11% -

Sales 100% 100% 100% 100% 100% 100% -

Korean Barbecue (1.9%) +7.6% +11.7% +13.3% +25.9% +25.3% 69%

Noodle Soup +3.1% +16.6% +22.6% +12.4% +30.0% +16.7% 17%

Japanese Pancake - - +18.5% (2.6%) +16.7% +0.5% 0%

Specialty Store +65.2% (52.2%) (2.7%) +0.9% +7.1% +5.5% 1%

Franchise +20.4% +17.1% +19.9% +15.3% +13.6% +24.4% 13%

Sales +7.9% +16.8% +14.4% +10.4% +23.2% +19.7% 100%


16

Per Share Data

Per Share Data Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE

(Before Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 06/2007 06/2008 06/2009 06/2010 06/2011 06/2012 Net Chg.

No. of Shares FY End (Shares) 273,800 1,220,100 1,230,600 1,403,500 4,935,182 - -

Net Profit / EPS (Shares) 258,337 1,061,266 1,221,294 1,235,201 4,267,056 4,938,192 -

Treasury Stocks FY End (Shares) - - - 151 714 - -

Earnings Per Share 422.1 396.1 371.6 410.3 124.2 154.5 -

Earnings Per Share (Fully Diluted) - 372.9 365.8 402.6 123.2 - -

Book Value Per Share 1,939.7 1,012.8 1,321.4 1,897.2 816.8 - -

Dividend Per Share 50.0 40.0 45.0 50.0 21.0 22.0 -

Payout ratio 11.8% 10.1% 12.1% 12.2% 16.9% 14.2% -

Per Share Data Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE

(Before Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 06/2007 06/2008 06/2009 06/2010 06/2011 06/2012 Net Chg.

Stock Split Factor 3.00 3.00 3.00 3.00 1.00 - -

Earnings Per Share 140.7 132.0 123.9 136.8 124.2 154.5 -

Book Value Per Share 646.6 337.6 440.5 632.4 816.8 - -

Dividend Per Share 16.7 13.3 15.0 16.7 21.0 22.0 -


Cash Flow Statement

Cash Flow Statement Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE



Operating Cash Flow 692 943 1,254 914 1,713 - -

Investment Cash Flow (643) (659) (772) (1,014) (1,036) - -

Operating CF + Investment CF 49 284 481 (99) 677 - -

Financing Cash Flow 241 (147) (236) 480 338 - -

Pretax Profit 285 685 858 955 1,080 - -

Depreciation 261 348 430 502 570 - -

Working Capital Changes (3) (11) (16) 32 38 - -

Tax Charges (204) (200) (417) (600) (407) - -

Capital Expenditure (609) (737) (722) (977) (927) - -

Free Cash Flow (270) 86 133 (88) 356 - -

(New Openings of Company Stores) - - - - - 1,600 -

(Other) - - - - - 200 -

Capital Expenditure 730 827 874 1,096 1,119 1,800 -

Depreciation 261 348 430 502 570 638 -

Operating Profit 573 775 832 983 1,195 1,478 -

EBITDA (OP + Depreciation) 834 1,122 1,262 1,484 1,765 2,116 -

No. of New Company Store Openings 9 9 10 13 15 20 -

Capital Expenditure Per Store - - - - - 80 -


17

Balance Sheet

Balance Sheet Par.Act Par.Act Par.Act Par.Act Par.Act Par.CoE



Cash & Deposit 1,147 1,244 1,489 1,870 2,885 - -

Accounts Receivables 128 145 176 197 206 - -

Securities 81 74 86 107 120 - -

Other 157 178 220 249 387 - -

Current Assets 1,513 1,640 1,971 2,424 3,598 - -

Tangible Assets 2,769 3,060 3,436 3,840 4,477 - -

Intangible Assets 75 67 73 70 72 - -

LT Investment Securities etc. 1,544 1,572 1,702 1,724 1,723 - -

Fixed Assets 4,388 4,700 5,211 5,634 6,272 - -

Total Assets 5,901 6,340 7,182 8,057 9,870 - -

Accounts Payable 275 274 301 375 435 - -

Short Term Debt 1,002 1,025 1,191 1,214 990 - -

Other 699 794 1,144 927 1,622 - -

Current Liabilities 1,977 2,093 2,636 2,516 3,047 - -

Long Term Debt 2,941 2,502 2,173 2,119 1,864 - -

Other 452 509 747 760 922 - -

Fixed Liabilities 3,392 3,011 2,920 2,878 2,786 - -

Total Liabilities 5,369 5,104 5,556 5,395 5,833 - -

Shareholders' Equity 527 1,234 1,626 2,663 4,031 - -

Other 5 2 1 (0) 6 - -

Net Assets 532 1,236 1,626 2,663 4,037 - -

Total Liabilities & Net Assets 5,901 6,340 7,182 8,057 9,870 - -

Interest Bearing Debt 3,943 3,528 3,365 3,333 2,853 - -

Net Debt 2,796 2,284 1,876 1,463 (32) - -

ROA (Net Profit / Total Assets) 2.1% 7.1% 7.2% 7.1% 6.6% 7.7% -

ROE (Net Profit / Equity) 36.5% 79.7% 36.8% 31.2% 19.9% 18.9% -

Days for Inventory Turnover 11 9 9 11 9 - -

Quick Ratio 64% 66% 63% 82% 101% - -

Current Ratio 77% 78% 75% 96% 118% - -

Equity Ratio 8.9% 19.5% 22.6% 33.0% 40.8% - -

Net Debt Equity Ratio 530.4% 185.1% 115.4% 54.9% (0.8%) - -


18

6.0 Other Information

Set Up in 1969

The Company was first founded as Genji ltd. In September 1969. Genji Ltd. opened the first company store

for Korean barbecue in December 1995 at Toyohashi Aichi-pref. where it was based, and then the company

name changed to The Monogatari Corporation in November 1997. Then, the Company opened its first

company store for noodle soup in June 2001. The Company nicely expanded its business, after this, and the

Company had an IPO on the JASDAQ stock exchange (in those days) in March 2008, while the listing on

Tokyo Stock Exchange Second Section in June 2010 and on Tokyo Stock Exchange First Section in June 2011

was followed. On top of the same old debt finance prior to the listing, the Company took advantage of equity

finance after the listing, having given increasing stability to its balance sheet to date. At the moment, the

Company holds almost sufficient funds to carry out its long-term projections.

The top management with the Company is Mr. Yoshio Kobayashi (born in 1949), the current president. He is

also the leading shareholder with the Company, holding 15.0% of the shares outstanding. In April 1977, Mr.

Kobayashi joined with Genji Ltd. (currently the Company) that was founded by his mother. He was

appointed as president in April 1980, and has enlarged the business with the Company as the top

management. Most recently, it was announced that he is to be appointed as chairman & CEO on 22

September 2011. Mr. Kobayashi implements his policy, in reality, to separate ownership and management

with the Company. He has been gradually reducing his holdings of the shares of the Company, by selling

them in the stock market, while trying to find the successor for him as the top management with the

Company out of people who would not succeed any of his shares. Mr. Yukio Kaji (born in 1956), having joined

with the Company in April 2011, is now appointed as president & COO, replacing Mr. Kobayashi.

19

Company History

Date Events

December 1949 “Shubo Genji”, an oden restaurant store, founded in Hirokoji, Toyohashi, Aichi-pref.

September 1969 Genji Ltd., founded with a ¥5m capital injection

December 1995 The first Korea barbecue store, “ Yakiniku Icihban Karubi Akebono-Store”, opened in

Toyohashi, Aichi-pref.

June 1997 Company name, changed to The Monogatari Corporation from Genji Ltd.

November 1997 Headquarter office, moved to Nishi-Iwata, Toyohashi, Aichi-pref. from Mukaiyama,

Toyohashi, in order to expand its floor space

December 1998 The first franchisee for Korean barbecue, “Yakiniku Ichiban Karubi Hane-Store”, opened in

Okazaki, Aichi-pref.

August 1999 “Kama-Age Chaashu Shanghai Butamen”, based on a new format for Chinese cuisine,

opened in Toyohashi, Aichi-pref.

June 2001 “Marugen Ramen Mikawa-Anjo-Store”, the first large-scale noodle soup store, opened in

Anjo, Aichi-pref.

May 2002 “Margen Ramen Okehazama-Store”, the first franchisee of Chinese Cuisine, opened in

Midori-ku, Nagoya.

October 2002 “Korean Barbecue Ichiban Karubi Tsukimino-Store”, renewed and opened as “Korean

Barbecue Ichiban Kalbi Tsukimino-Store”, i.e., a new format for Korean Barbecue

November 2003 “Kama-Age Chaashu Shanghai Butamen”, renewed as “Hong Kong Kitchen Myourenka”,

i.e., a new format

December 2004 “Byakuro Tantanmen”, a new format, opened in Sagamihara, Kanaga-pref.

November 2005 “Margen Ramen Ichinomiya-Store”, renewed and opened as “Nidaime Margen

Ichinomiya-Store, i.e., a new format

December 2005 “Byakuro Tantanmen”, renewed and opened as “Osaka-Umeda Okonomiyaki Homp

Sagamihara-Store”, i.e., a new format

March 2006 “Yakiniku Ichiban Karubi Miyagidai-Store”, renewed and opened as “Yakiniku King

Miyagidai-Store”, i.e., a new format for Korean Barbecue

July 2006 The first franchisee for Japanese Pancake, “Osaka-Umeda Okonomiyaki Hompo

Niigata-Ohmi-Store”, opened in Chuo-ku, Niigata.

March 2007 “Yakiniku King Okyozuka-Store”, renewed and opened as “Yakiniku King Okyozuka-Store”,

a new format for Korean Barbecue

March 2008 IPO at JASDAQ Stock Exchange

June 2010 Listed on Tokyo Stock Exchange Second Section

June 2011 Listed on Tokyo Stock Exchange First Section

20

Disclaimer

Information here is a summary of “IR Information” of the Company, compiled by Walden Research Japan,

from a neutral and professional standing point, in the form of a report. “IR Information” of the Company

comprises a) contents of our interview with the Company, b) contents of presentations for institutional

investors, c) contents of timely disclosed information and d) contents of the homepage etc.

Company name: Walden Research Japan Incorporated

Headquarters office: #1110 4-12-4 Hatchobori, Chuo-ku, Tokyo JAPAN 104-0032

URL: www.walden.co.jp

E-mail: [email protected]

Phone：+81 3 3553 3769

Copyright 2011 Walden Research Japan Incorporated

http://www.walden.co.jp/mailto:[email protected]

The Monogatari Corporation (3097)1.0 Executive Summary (6 September 2011)Ongoing Growth by Developments of New Formats

2.0 Company ProfileRunning Korean Barbecue Chain Restaurant Stores

3.0 Recent Trading & ProspectsFY06/2011 ResultsChanges in Company Forecasts & ResultsFY06/2012 Company ForecastsSales by Segment (Cumulative, Quarterly)Income Statement (Cumulative, Quarterly)Cash Flow Statement (Cumulative, Quarterly)Balance Sheet (Quarterly)Long-Term Prospects

4.0 Business ModelDeveloping New Formants for Chain Restaurant StoresNew Store OpeningsStores by Region

5.0 Financial StatementsIncome StatementSales by SegmentPer Share DataCash Flow StatementBalance Sheet

6.0 Other InformationSet Up in 1969Company History

Documents

The Monogatari Corporation (3097)walden.co.jp/pdf/3097_monogatari_english.pdf1 URL: Written by Yoshiyuki Muroya E-mail: [email protected] Phone：+81 3 3553 3769 The Monogatari