http://walden.co.jp Just another WordPress site Wed, 30 Nov 2011 http://backend.userland.com/rss092 ja Smartphone & Tablet Computer Earnings with ELECOM are nicely growing, driven by ongoing strengths associated with Smartphone and tablet computer (e.g. iPad). In Q1 to Q2 FY03/2012, sales came in at \28.9bn (up 23.6% YoY) and operating profit \3.0bn (up 47.7%). Out of overall net increases in sales \5.5bn, sales associated with Smartphone and tablet computer accounted for \3.5bn (64%). The Company is one of the leaders in the domestic market for Smartphone accessories such as specialty cases and LCD protective films, and it plans to further increase its market share to higher levels, with them. At the same time, the Company is also in the process of developing & launching new products in new areas related to Smartphone and tablet computers, in order to more incorporate growth of the markets.

Recent trading in Q3 has been roughly in line with assumptions in full-year Company Forecasts made at the begging of the current fiscal year. Still, it has been mentioned by the Company that, when the negative impacts associated with floods in Thailand gives rise to sever shortage in the market for PCs, the Company, being also exposed to the same old computer peripherals, may suffer, short-term. Another concern, near term, is that the Company’s operations in Europe may suffer from economic slowdown in Europe. Still, the Company has already made a changeover with its overseas strategy to date, and the establishment of direct sales network in Asia is now the key issue. Thus, it should be the case now that the Company lowers its resource allocations in Europe, and such trends may appear in the foreseeable future.

Although there are some concerns in a short-term view, the Company believes it should see steady earnings growth in a long-term view. Sales related to Smartphone and tablet computer are to consistently increase, benefiting from the market growth and through the Company’s strategy to be more involved with such markets. On storage (external HDDs) and wireless LAN equipment, the Company suggests that it has a large room to raise market share from the current low levels. The Company suggests two-digit billion yen in prospective recurring profit in a few years view, versus \5.4bn in FY03/2011.]]> http://www.walden.co.jp/pdf/6750_elecom_english.pdf Still Great Room for Development MonotaRO, running Internet store “MonotaRO” which is a procurement supporter for manufacturers etc., has a high potential to see long-term steady earnings growth. The Company is in charge of selling diversified products with small volume, collectively some 1.5 million items, mainly for small/mid-sized manufacturers on its own website, while the market to which it is exposed is estimated at some \5 trillion or even larger (when procurement by major manufacturers etc. is included). In the market, the Company has consistently increased its market share by replacing the same old traditional dealers of tools, hardware, autoparts etc., but the levels of annual turnover with the Company is no more than \22.0bn at present, and thus there is a fairly large room for the Company to further penetrate into the market.

Together with its high searching capability, the Company’s operations on its website provide those who are supposed to efficiently procure wide-ranged products, probably, with the best solutions. On the own procurement side, the Company often sees volume discounts, while the Company shares such benefits with its many small/mid-sized customers (that cannot benefit from volume discount in procurement on their own) by reasonably lowering selling prices to the extent of volume discounts it enjoys. It appears that this is one of the key drivers for the Company to acquire new customers now, given that potential customer bases are all increasingly cost-conscious, as a result of extended trends of economic slowdown.

In Q1 to Q3 FY12/2011, sales came in at \15.9bn (up 25.8% YoY) and operating profit \1.6bn (up 63.3%). While sales were enhanced by steady increases in the number of new customers, gross profit margins were rather on the trends of improvements (28.3% versus 27.6% during the same periods in the previous year) due mainly to improvements in sales mix, driven by increasing sales of private-brand products and imported products, both carrying relatively higher margins. More importantly, steady increase in sales made a favorable gearing effect (reducing exposure to SG&A expenses) at the operating levels, having led to substantial increases in operating profit margins to 10.0% from 7.7%. According to the Company, the potential customer bases are some 10x larger than the existing customers in terms of numbers (when procurement by small/mid-sized customer bases only are considered), while the Company’s efficient marketing strategy consistently increases the number of new customers. Even in the most conservative scenario, the Company should achieve more than 10% growth pa in both sales and earnings in a long-term view.]]> http://www.walden.co.jp/pdf/3064_monotaro_english.pdf Photovoltaic Market Stalls Yamaichi Electronics expects to turn into profits in H2 FY03/2012. Stall of the photovoltaic market has made the Company to suffer from unexpected earnings deterioration, but the Company now expects its photovoltaic business (PV Solution Business) to see \0.2bn improvements in earnings in H2 versus H1, and this will drive the earnings recovery with the Company. Sales of this business is to inevitably see further sequential decreases, but production yields are to improve while there will be no further burden of initial setup costs for new production facilities.

The overall picture with the Company, at the moment, is that the semiconductor-related business (Test Solution Business) that incorporates burn-in sockets as the mainstay products, i.e., the traditional key earnings driver with the Company, keeps making money, as well as connector-related business (Connector Solution Business) that has been established as the second earnings driver since FY03/2010, but photovoltaic business (PV Solution Business), which used to be a good candidate for the third earnings driver, is making losses to more than offset profits elsewhere. Meanwhile, positive news is that the Company implies that high-speed data transmission connectors, which have been developed for years, are imminently becoming commercially viable. This business belongs to totally uncultivated market with the Company, and thus sales growth potential from here on could be so high in a long-term view. It could be the case that the Company lowers its resource allocations with photovoltaic business (PV Solution Business) in order to allocate more resource with connector-related business (“Connector Solution Business) to which the new business belongs.

Due mainly to stall in the photovoltaic market, the Company’s management plan (FY03/2012 to FY03/2014) will not be achievable, even in the first year of FY03/2012. The Company is to revise its management plan and to release revised one in line with the releases of FY03/2012 results, presumably with more resource allocations upon connector-related business (Connector Solution Business).]]> http://www.walden.co.jp/pdf/6941_yamaichi_english.pdf “Ensuring SATO's Global Success” SATO HOLDINGS, realizing “precision, labor-saving and resource-saving” in diversified industries, together with its auto-identification systems, has revealed its management plan, called “Ensuring SATO's Global Success”, together with a changeover in top management. The Company has now defined more clearly its long-term plan to achieve sales \150.0bn and operating profit \15.0bn in FY03/2021. According to the plan, prospective sales are to increase 6.9% pa (CAGR), over a decade, and operating profit 13.5%. While sales in Japan are expected to grow steadily, sales overseas, both in developed countries and emerging countries, are also expected to rise during the same periods. Profit margins are to see gradual improvements every year, due mainly to volume effects.

At the stage of Q2 FY03/2012 results, the Company closed down its label factory in Germany, one of the biggest loss-making operations in Europe, and fully transferred operations to its new base in Poland, and thus the operations in Europe are to turn into profits in H2, eventually enabling the Company to make profit in Europe on a full-year basis in FY03/2013. In developed counties, including those in Europe, the Company assumes there will be long-term growth potential, driven by successful applications of Japanese approaches. For example, the Company's systems hold the overwhelming share in the domestic market for medical applications, and the idea is to develop the same business model in developed countries using strengths cultivated in Japan. On the other hand, the Company plans to increase market share and address customer needs in emerging countries through the introduction of low-end printers.

Recent trading in FY03/2012 has been roughly in line with the Company's assumptions. Forex losses, stemming from the recent yen's strength, are a negative factor to lower the levels of recurring profit, but this is to be compensated for by smaller-than-expected losses, at the extraordinary levels, associated with the reorganization in Europe. Full-year prospective net profit remains unchanged at \2.4bn (up 4.8x YoY).]]> http://www.walden.co.jp/pdf/6287_sato_english.pdf A Possibility to Maintain ROE 40% Dr. Ci:Labo, developing the market for pharmaceutical cosmetics, sees better-than-expected earnings. In case the Company implements share buyback worth \6.0bn in FY07/2013, the Company is likely seeing ROE 40% for three years in a row. Compared with assumptions in The 3rd Mid-Term Management Plan (FY07/2011 to FY07/2013), front-loaded investments in overseas developments tend to be delayed, resulting in better-than-expected profit margins, while the latest share buyback (worth \6.5bn, effective on 28 July 2011) substantially improves efficiency of capital. Based on our assumptions, earnings per share in FY07/2013 should be \30,232, overshooting \25,750 in The 3rd Mid-Term Management Plan by 17.4%.

The Company is mainly in charge of supplying consumers with cosmetics for skin-care, through mail order. Products are developed by Yoshinori Shirono, the founder (and the current chairman) of the Company, who has also been a doctor of beauty dermatology, and they are called pharmaceutical cosmetics. The market for cosmetics in Japan remains sluggish, but the Company succeeds in continuously expanding sales together with ongoing market share increases, coping with customer needs, combined with favorable services in many respects. The Company sees steady increases in sales of highly-valued-added products, while production 100% consigned to external subcontractors, having achieved recurring profit margins 28.1%, free cash flow \4.5bn (net cash \7.8bn, total assets \20.2bn) in FY07/2011.

The number of registered members stood at 7.63m (as of the end of July 2011, up 1.01m YoY) for the mainstay sale channel of mail order. The Company plans to increase the number up to 10m over the next several years. This implies there is still a meaningful room for the Company’s products to raise its penetration from the current levels, and thus the Company has a potential to enhance sales in the future. To date, the developments overseas have remained not so substantial, being in the initial stage of recognition improvements, but sales overseas are expected to start growing on a full-fledged basis in FY07/2014 and onward.]]> http://www.walden.co.jp/pdf/4924_doctor_english.pdf 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 external factors like hiking costs for procuring food materials & ingredients and for fuels 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.]]> http://www.walden.co.jp/pdf/3097_monogatari_english.pdf Front-Loaded Investments and Earnings Growth Potential『Tosho, mainly in charge of running “Holiday Sports Club” or health club, has a long-term growth potential. This is in line with a prospect that a series of new center openings for “Holiday Sports Club” is expected to feed through in a long-term view. However, short-term, earnings with the Company　are under pressure, given increasing front-loaded investments associated with new center openings. In Q3 (Oct to Dec) FY03/2011, the Company had two new center openings with “Holiday Sports Club”, while some of costs associated with three new center openings in Q4 (Jan to Mar) also had been incurred. Such front-loaded investments are essential for the Company to see future earnings growth, with the Company’s business model. Meanwhile, the impacts from “Tohoku Region Pacific Ocean Earthquake” are currently under investigations. The operations of some centers have been restricted due to unstable supply of fuels and for the sake of saving power to date, although the Company’s facilities have not been effectively damaged. Here could it be a concern this may negatively affect the number of members with such centers.]]> http://www.walden.co.jp/pdf/8920_tosho_english Changeover to New Charging SchemeNEXT, with the operations of one of the largest real estate information portal “HOME’S” in Japan as the key earnings pillar, is to suffer short-term corrections with its earnings. “Tohoku Region Pacific Ocean Earthquake”, occurred on 11 March, did not lead to any meaningful damages to its board members and employees nor to its computer systems, while the impacts to earnings are currently under investigations. So far, the Company has been seeing advertising expenses \0.4bn to \0.5bn per quarter, but it is assumed now that the levels are as much as \1.1bn in Q4 (Jan to Mar) FY03/2011. This is in line with the Company’s intention to contribute to earnings with the affiliated stores, through January to March when the market for real estate is in the prime time and just after the changeover to new charging scheme with the Company. Meanwhile, the Company claims that this is a one-off issue, and this does not matter with the Company’s long-term growth potential.]]> http://www.walden.co.jp/pdf/2120_next_english A Recovery Expected in Q4TOWA, the leading maker in the market for semiconductor molding equipment, saw favorable earnings recovery in Q1 to Q2 FY03/2011 results. Nevertheless, the order intake in Q2 (\4.1bn) suffered from a sharp correction from Q1 order intake (\9.0bn), while it seems the trend of correction has been going on, likely to lead to order intake of some \3.4bn in Q3. Still, the Company (i.e., TOWA) suggests a sequential recovery of order intake in Q4 over Q3, up to the levels in Q2 (\4.1) or more. In the most recent order intake, another trend to be suggested is that the LED side is doing rather worse than expected, while the semiconductor side is doing rather better than expected. It could be discussed that the Company’s order intake basically hinges on the trend of semiconductor capex (back-end) on a global basis, and thus that the levels of order intake are beyond the control by the Company to a large extent. In fact, having learned another lesson in the course of global economic recession, started in 2008, the Company has been reforming itself in order to set up “A Corporate Structure to Make No Deficit”, even during the periods of order intake corrections, by means of carrying out full-fledged reductions in fixed costs. Now, after the trials so far since then, the Company spots that its break-even point is less than \16.0bn in terms of sales in FY03/2011 versus \21.0bn in FY03/2010.]]> http://www.walden.co.jp/pdf/6315_towa_english High Exposure to In-Car ConnectorsIriso Electronics, a connector maker with a high exposure to in-car connectors, is seeing favorable earnings growth. In Q1 FY03/2011 results, released on 10 August, sales came in at \6.0bn (up 37.4% YoY), operating profit \0.8bn (4.6x) and operating profit margins 14.0%. Full-year Company forecasts are going for sales \23.5bn (up 11.2%), operating profit \3.0bn (up 48.1%) and operating profit margins 12.7%. Recent trading is running ahead of assumptions with Company forecasts, but full-year Company forecasts have remained unchanged so far. The Company is in charge of developments, manufacturing and sales of variety of connectors, while being exposed to in-car connectors as much as 60% in terms of application (in Q1 results) as the key characteristics. Presumably, its exposure in terms of earnings is even higher. The Company’s connectors are adopted as components of diversified in-car electronics and as those of electronic devices like car navigation, and its direct customers are so-called “Tier1”, i.e., the first suppliers of car components for car makers. The Company develops its businesses both domestically and overseas, and the recent driving forces for sales include increasing supply shares among “Tier1” in Europe as well as increasing volume of cars in Japan due to eco-car tax deductions and the Government subsidies. Q1 sales of in-car connectors were \4.0bn, up 6.8% QoQ and up 56.1% YoY.]]> http://www.walden.co.jp/pdf/6908_iriso_english.pdf Leading the Market for Piston Rings in JapanIn Q1 FY03/2011 results, released on 4 August, sales came in at \18.5bn (up 36.6% YoY), recurring profit \1.9bn (6.3x). Compared with H1 Company forecasts, sales were achieved by 52.8% while recurring profit 75.1%, and thus earnings are running ahead of assumptions. Nevertheless, the environment for the domestic market for automobiles in H2 remains as a risk for full-year Company forecasts calling for sales \71.0bn (up 6.8%) and recurring profit \5.5bn (up 37.4%). The Government subsidies for eco-cars were a major driving in the domestic market for automobiles in H1, and this should lead to a correction in H2 to some extent. Riken is an independent auto-parts maker, mainly involved with piston rings with the leading 50% market share in Japan, as well as with camshafts, sealing etc. In the market for piston rings on a global basis, Riken (18% share) has a tie-up with Mahle (25% share), based in Germany, forming the world-largest group for producing piston rings, collectively accounting for 43% of the market. The second group comprises Federal-Mogul, based in the US, and TPR (6463), holding 25% share and 12% share, respectively, and accounting for collective 37% of the market. Mainly has Riken developed the domestic market in which own market share is high, while its exposure to the overseas markets to date often relates to cases through tie-up operations. Contribution to earnings from these overseas tie-up operations is booked as equity-accounted income at the non-operating levels with the Company’s consolidated accounts, and this equated to as much as 22% of recurring profit in Q1 results. Still, this is not good enough, given that TPR, or one of peers, is more rapidly increasing its exposure to overseas markets like China in particular.]]> http://www.walden.co.jp/pdf/company_visits_2010_10_01_english.pdf 810,000 Dish-RecipesEarnings are surging with the Company, running a PC site “Cookpad” and a mobile site “Mobile Dish-Recipe”. In Q1 FY04/2011, sales came in at \732m (up 75.6% YoY), operating profit \394m (up 120.5%). Contents of the Company’s sites are dish-recipes as many as 810,000, while the number of unique users for “Cookpad” in July 2010 stood at 9.44 million (up 38.9% YoY), together with about half of this on mobile front. As far as females in their 30’s in Japan are concerned, the Company penetration is as high as 47% with its services. Currently, the key driver for sales with the Company is increasing membership fees from all those users, collectively, over 400,000, to date. With a monthly charge of \294, the members are entitled to use high-functional services, making them take advantage of the contents with a high convenience. The sites are free for being accessed, but it turns out to be just advantageous to sign it up when assuming a case of everyday accesses, having resulted in ongoing sequential increases in the number of registered members. Out of the estimated number for collective unique users for the Company’s sites, i.e., 15 million, the registered users equate to less than 3%, implying ongoing increases from the current low levels in the future. On top of this, the number of unique users also has a high potential to expand from now on.]]> http://www.walden.co.jp/pdf/company_visits_2010_10_01_english.pdf A Future Chance for Resumption of Dividend PaymentIn Q3 FY08/2010 (9-month period), sales came in at \29.7bn (down 50.9% YoY), operating profit \2.5bn (up 1.6%), recurring profit \1.5bn (versus losses in the previous year) and net profit \0.7bn (ditto). The current levels of the turnover with the Company equates to some 30% when compared with the peak levels in FY08/2007. This is a result of the Company’s full-scale reorganization to pull out of all the loss-making operations. Through this process, the Company maintained making money at the operating levels, but it reported massive losses at the non-operating and extraordinary levels, associated with the reorganization, having ended up with collective net losses of \60.4bn through FY08/2007 to FY08/2009. Earned surplus stood at negative \68.1bn as of the end of FY08/2009, while shareholders’ equity \4.5bn supported by paid-in capital etc. of \72.6bn. With a condition that the Company will not report any major losses as in the previous years, the Company should see some sequential improvements in its state of finance, and thus imply sequentially improved future chance for resumption of dividend payment. While dividends were suspended in both FY08/2008 and FY08/2009, the Company has not announced any prospects for the resumption to date. The other thing is that the Company started a capital tie-up with Incubator Bank of Japan, Limited in March 2009, while it was announced on 16 July 2010 that the tie-up was to be terminated. Even now, the Company has some loans outstanding associated with the bank, but “The issue would not affect earnings of the Company”, according to the Company.]]> http://www.walden.co.jp/pdf/company_visits_2010_08_24_english.pdf Steady Increases of Functional Foods Manufacturing on an OEM BasisSales were \10.9bn (up 15.9% YoY), operating profit \0.7bn (up 27.3%) in Q3 FY08/2010 (9 months) results, announced on 9 July, having shown favorable earnings growth with the Company. Still, the Company has achieved only 63.4% of prospective operating profit in FY08/2010, and thus it remains questionable whether the Company may meet its Company forecasts or not. The key driving force with the Company’s earnings is the manufacturing of functional foods on an OEM basis, and this business is faring well, literally driving the earnings with the Company. In terms of Q2 results (6 months), the manufacturing of functional foods on an OEM basis saw sales of \2.4bn (up 43.3%), due mainly to new demand from new clients, and this trend is still continuing. Meanwhile, the Company suffers from delayed developments in its advertising agency business, reporting operating losses, albeit small, making Company forecasts a touch too optimistic. In Q3 results (9 months), the segment of Health Care, including the manufacturing of functional foods on an OEM basis, accounted for the bulk of earnings, while also including retailing of functional foods through own shops and via mail order as well.]]> http://www.walden.co.jp/pdf/company_visits_2010_08_24_english.pdf Leading the Market for Electrolyzed Reduced WaterIn Q1 FY03/2010 results, sales came in at \2.3bn (up 4.6% YoY), operating profit \0.4bn (up 26.0%), and they were roughly in line with Company forecasts. On a full-year basis, sales are expected to be \9.1bn (up 10.2%) and operating profit \1.4bn (up 18.9%). The Company has a dominant exposure to its home-use system for electrolyzed reduced water, over 90% in terms of sales and even more in terms of earnings. The system comprises hardware (accounting for some 75% of sales) and filter cartridge (25%). Meanwhile, the Company is not only involved with the developments and the manufacturing of the system but also with sales directly to consumers. Some 80% of hardware sales are associated with so-called “Shokuiki Hanbai” and its equivalents, in which the Company holds small gathering directly for consumers so that they should notice detailed advantages of the Company’s system. In this main sales channel, “TRIM ION NEO”, the Company’s new system, made a substantial contribution to overall hardware volume, having resulted in 1.8x increases when compared with the levels in the previous year and this was the key positive factor for Q1 earnings growth. “TRIM ION NEO” has retail price of \172,000 per unit and filter cartridge to be placed every 12 months \9,975. These levels are meaningfully lower than their old equivalents, and a concept, advocated by the Company, that “the system is of home appliance”, does appear to have started to penetrate into consumers. The Company is the leading maker of the home-use system, accounting for almost half of the domestic market, while the second Panasonic Electric Work (6991).]]> http://www.walden.co.jp/pdf/company_visits_2010_08_24_english.pdf Exceeding AssumptionsQ2 FY01/2011 results are set to be released on 9 September, and the release is likely to confirm that earnings are running ahead of the assumptions of full-year earnings forecasts by the Company. At the Q1 stage, sales were exceeded by 6.3% and operating profit by 20.2%. More importantly, it is suggested that the trends of earnings have not changed much so far. On a full-year basis, sales are expected to be \2,420m (up 6.9% YoY), operating profit \604m (up 1.3%) and operating profit margins 25.0%. In Q1 results, sales came in at \571m (up 18.4%), operating profit \143m (up 59.4%) and operating profit margins 25.0%. The “EPCO System” is steadily accepted by clients, and thus this is driving sales and earnings with the Company. The Company’s target is to achieve operating profit growth rate of 30% pa and operating profit margins of 30%. In FY01/2009, the Company achieved the target on an operating profit growth rate front, by reporting operating profit \596m (up 35.3%) and operating profit margins 26.3%.]]> http://www.walden.co.jp/pdf/company_visits_2010_08_24_english.pdf Temporary Staff Service for General Contractors and Construction-Related OperationsIn terms of 9-month results in Q3 FY09/2010, announced on 30 July, sales were \3,632m (equating to 76.0% of prospective full-year sales) and recurring profit \451m (79.1%). Meanwhile, the Company’s long-term target calls for sales of \11,570m (versus \4,780m in FY09/2010) and recurring profit of \1,740m (\570m) in FY09/2013. Currently, temporary staff service for general contractors and construction-related operations is the key earnings pillar with the Company. The core of this business is that of construction management engineers (white collar) for general contractors, on a regularly employed basis. In the market for this business, the largest five operators account for collective 50% of the market, while the Company is ranked No. 5 with a 5% market share. A typical feature of the Company on a cost front is that it has a high exposure to low-wage youngsters, given that the employees in their 20’s account for more than 60% of total. Meanwhile, the Company has high exposure to relatively highly-rated construction projects in metropolitan areas on an order intake front, pursuing profit margins combined with its low-wage burdens. A problem is that the industry trend for general contractors as a whole is now sluggish and will remain so in the foreseeable future. In order to cope with this, the Company is well expanding into electric engineering, equipment construction etc. or all those construction-related operations with its temporary staff service.]]> http://www.walden.co.jp/pdf/company_visits_2010_08_24_english.pdf Real Estate Rents Information Services on Various MediasThe Company released its Q2 FY10/2010 results on 14 June. “Media Business” or real estate rents information services, accounted for almost 90% of operating profit (\2.3bn). “Media” relates to its portal site, its paper medium and its mobile site, and the Company is in charge of providing end users with real estate rents information (advertising for objects available) through the own medias, having seen high margins of 43.6% in terms of operating profit before elimination. With its portal site, the number of objects posted is 600,000 to 800,000 (fluctuating due to seasonal factors through the year), while the Company issues paper medium “CHINTAI” for end users, different ones with selected objects in the 26 different regions across Japan. One third of the objects dealt in by the Company are those of ABLE (8872) or one of the largest brokers of objects for rents, while the rest comprises those of the other nation-wide majors as well as of smaller-sized players dedicated to operations in specific regions. As long as the paper medium “CHINTAI” in metropolitan regions are concerned, the bulk of objects posted are of ABLE, given that ABLE has many directly-operated shops in there. On the contrary, the paper medium has a little exposure to ABLE objects in non-metropolitan regions where it has a limited exposure to its directly-operated shops. With its company forecasts, sales in FY10/2010 are expected to be \15.8bn (up 5.5% YoY), operating profit \3.5bn (up 9.5%) and operating profit margins 21.8%.]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_english.pdf Creating From NatureBased on natural resources such as fish and shellfish, the Company, manufacturing natural seasonings as well as function food ingredients, has shown steady earnings growth. In FY03/2010, sales came in at \21.9bn (up 8.6% YoY) and operating profit \1.7bn (up 66.9%). Meanwhile, “Challenge & Growth”, or the Company’s long-term plan, calls for sales of \30.0bn and operating profit of \2.5bn in FY03/2013. Skipjack tunas, tunas, crab shells, scallops and other materials are processed into the Company’s products though the Company’s processing stages including extraction, refinement, dryness etc, shipped to the Company’s customers comprising domestic processed food makers (top 100 accounting for some 80% of sales here) and health food makers. The former relates to “Seasoning Business”, and it accounted for 67% of operating profit in FY03/2010 while the latter “Function Food Business” 31%.]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_english.pdf A Major Mechanical Parts SpecialistIn Q3 FY08/2010, released on 12 July, the Company performed well, with sales \28.6bn (up 8.7% YoY) and operating profit \1.0bn versus losses in the last Q3. Still, it appears that the levels of operating profit suffered from a little shortage when compared with the Company’s expectations calling for a full-year operating profit \1.4bn in FY08/2010, having achieved 68.9% so far in Q3. The Company supplies mechanical parts with major office automation makers, home appliance makers etc., and one-off adjustments with a customer’s production appear to have negatively affected its performance in Q3 results. Mechanical parts, developed and manufactured by the Company, are made of soft materials such as films etc. and processed by means of specialty high precision technology called “SOFT PRESS”. Sales associated with office automation equipment in terms of final products equate to 48% of sales, where the Company’s products are used as toner cartridge sealing for copiers (leak prevention), for instance. It differs for the Company with who to compete depending upon in which customers, which regions to refer to (regularly competing with a few competitors), while it is noteworthy that the Company almost always has relatively large supply share as the specialist of mechanical parts. With the Company, the largest eight customers account for collective 60% of sales or more, and all of them are Japanese makers.]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_english.pdf Improvements of Market CircumstancesDeveloping and producing switching power supply mainly for “Industrial Equipment”, the Company is anticipated to see surging earnings. In FY05/2011, sales \24.0bn (up 42.8% YoY) and operating profit \6.0bn (up 98.1%) are anticipated by the Company. Specializing in standard products with its developments and production and listing these products on a catalogue (4,000 to 5,000 items, currently traded), the Company has some 90% exposure to sales through dealers in both domestic market (76.2% of sales) and overseas market (23.8%). In addition to own marketing, the direct sales force with the Company is also in charge of sales promotion guidance for all these dealers. “Industrial Equipment”, mentioned earlier, relates to such final products like control equipment (40.5% of the domestic sales) whose demand hinges on the levels of capital expenditure among manufacturers, telecom & broadcasting equipment (16.1%) including telecom-infrastructure-related equipment such as mobile phone base-stations, semiconductor production equipment (10.3%) etc. On the overseas market front, the Company has a similar exposure to final products in terms of ratio to overall sales. In the market on a global basis, the Company is one of the second-tiers with a stable 8% share. The key strategy of the Company is to pursue profit margins, and it could be said that the market share is nothing but something produced as a result of the Company’s pursuit. Lowering market defective rates as well as rates of total losses from spoilage are the two key issues always mentioned by the Company, and they are the details of the strategy. Consequently, recent improvements of the market circumstances should directly enhance earnings with the Company which sees stable market share.]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_english.pdf Towards Even Higher Market Share7月8日に発表された2010年8月期第3四半期実績は、売上高90億円、営業利益18億円での着地となった。通期予想における売上高128億円、営業利益30億円は据え置かれた。同社は、小・中・高生対象の個別指導塾「明光義塾」を直営並びにFC方式にて全国展開している。第3四半期実績においては、直営が営業利益の約20％を占め、FCが約80％を占めた。同社の展開する「明光義塾」は、2010年2月末現在で1,863教室（直営：211、 FC:1,652）、総在籍生徒数125,065人であり、学習塾業界においては公文、学研教室に次いで第3位の規模である。同社の現在の成長を支える最大のドライバーは、既存のFCオーナーによる新教室の開設であり、これが今後も同社の成長を担う見込みである。1997年の上場以来の13年間において、同社の運営する総教室数並びに総在籍生徒数は毎年例外なく前年比増を達成し、累計ではそれぞれ2.3倍、3.2倍の水準にまで増加している。同社が対峙する学習塾・予備校市場の規模は現状で年間9,000億円を超える水準にあるが、少子化を背景に毎年その市場規模は縮小してきており、今後に関しても緩やかな縮小が見込まれている。ただし、同社は継続的な総教室数並びに総在籍生徒数の増加を背景にその市場シェアを着実に上昇させており、直近値では同市場におけるシェアを4.7％にまで高めている。同社の経営戦略においては、ボリュームゾーンである成績中位層の生徒をターゲットとして生徒ひとりひとりに適応した個別指導を効率的に行い、業界平均的な費用負担で相対的に高い効果を提供しており、結果として市場シェアの継続的な上昇が実現されてきている。今後も更に市場シェアを上昇させて、売上高並びに利益を継続的に拡大させることが見込まれている。]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_japanese.pdf Better Earnings and TurnaroundSales came in at \454.8bn (up 2.0% YoY) and operating profit \10.8bn (up 55.1%) in Q3 FY08/2010, released on 9 July, and the results were better-than-expected. There was an improvement of 0.8% points at the gross profit margins to 24.6%, driven by decreasing sales of relatively low-margin items such as PC hardware etc. and increasing sales of relatively high-margin items such as home appliances (refrigerators, washing machines etc.). Nevertheless, recurring profit was limited to \6.8bn (down 5.4% YoY) due to equity-accounted losses \4.6bn at the non-operating levels, stemming from net losses \37.4bn (in FY02/2010) of Best Denki (8175), 15% held by the Company. Such huge losses were mainly attributable to one-off restructuring expenses with Best Denki, and they have been incorporated in the Company’s forecasts in FY08/2010. The equity-accounted affiliate has moved into profit at the net levels in Q1 FY02/2011 while it is expected to do so, on a full-year basis, and thus there should be a meaningful turnaround at the Company’s non-operating levels in FY08/2011 versus FY08/2010. At present, the Company calls for sales of \600bn (up 1.8% YoY) in FY08/2010, and this equates to 7.5% of the domestic retail market for consumer electronics (\8.0 trillion yen, according to the Company data). The Company is one of the largest-sized urban-type consumer electronics retailer chains, together with Yodobashi Camera (8.8% share).]]> http://www.walden.co.jp/pdf/company_visits_2010_07_26_english.pdf