On 14 November 2024, TOW, which focuses on the development of planning & producing for sophisticatedly integrated promotions, released its Q1 (July to September) FY06/2025 results. It has been revealed that the Company is achieving steady progress in its performance in line with assumptions of Company forecasts. With respect to Integrated Promotions, on which the Company focuses, sales have risen more than 10% over the same period of the previous year, while sales have secured an increase for Real-World Events, which is currently the mainstay, due to strengths associated with street promotions and exhibitions for beverages and tasty things. At the same time, the Company is proactively implementing measures to strengthen human capital management for long-term growth and investing heavily in themes such as AI and environment. Further, on 31 October 2024, the Company disclosed that it had entered into a basic agreement to acquire all shares of Qetic Inc., a company involved in planning, producing and operating for a wide range of social media and digital content, eventually making it a consolidated subsidiary with an objective of strengthening Integrated Promotions. We are to interview the Company's management to obtain further details, so that we should be able to update our Company Report and release it afresh.

On 12 November 2024, NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers for private homes, released its Q1 to Q3 FY12/2024 (January to September) results. It has been revealed that the Company was forced to suffer from a deterioration in earnings due mainly to slowing sales volume, but it is more important that there was a changeover from a decrease to an increase on a year-on-year basis for sales volume in Japan during the period of Q3 (July to September), while such a trend is persisting for Q4 (October to December) and thus the Company is now going for a year-on-year increase in sales and earnings during the relevant period. With respect to foreign operations, the Company’s performance is negatively affected by unfavorable market conditions in China, but Company forecasts now assume a year-on-year increase in sales volume for Q4 (October to December). We are to have an interview with the management to obtain further details in order to update our Company Report and release afresh.

On 14 November 2024, Shinwa, which mainly manufactures, sells and constructs scaffoldings used at fields of construction work, released its Q1 to Q2 FY03/2025 results. It has been revealed that the Company is seeing revenue higher than assumptions of initial Company forecasts and thus earning higher as well, which is in line with upward revision made beforehand on 11 November. The Company states that it has seen shipment pushed forward for a large-scale construction project on the Scaffolding Equipment side as well as having acquired work to construct scaffoldings more than initially planned in YAGUMI Group (the largest scaffolding construction company in the Tokai region and one of the largest in Japan), which has been a subsidiary of the Company since the beginning of the period. Further, the Company has seen revenue higher on the Logistics Equipment side at the same time. We are to attend the Company’s financial results briefing on the web, scheduled for Monday, 25 November, which will be followed by our interview with the management, so that we should be able to update our Company Report and release it afresh in due course.

On 31 October 2024, DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices mainly used for prevention of hospital-acquired infections and postoperative pain control, released its Q1 to Q2 FY03/2025 results. It has been revealed that capital efficiency is on the rise. According to our estimates, ROE of 15.1% has been achieved over the past 12 months (versus 14.6% for the actual results of FY03/2024). The background to this is that the Company has continued to pay out dividend equivalent to over 60% in terms of payout ratio for the past five years and more, while having seen a steady increase in earnings for Q1 to Q2 due mainly to increased sales of midterm strategic products, i.e., QinPot and COOPDECH AMY PCA. On the other hand, the Company has disclosed that the time for COOPDECH AMY PCA to be launched in overseas markets is to be delayed and thus that of sales expansion as well. The Company, which is prioritizing a spread in Europe, is working to obtain certification of MDR (Medical Device Regulation), which is essential for launching the product in Europe, while having just stated that it is now unlikely to do so by the end of FY03/2025 as in the original agenda. The Company is to respond to questions and other inquiries about the current situation at the financial results briefing scheduled for Tuesday, 10 December 2024.

On 15 October 2024, INTERLIFE HOLDINGS, running operations of interior construction and designing/construction of sound & lighting facilities, released its Q1 to Q2 FY02/2025 results. It has been revealed that the Company saw as much as 74.7% for rate of progress in operating profit against assumptions of full-year Company forecasts, implying a probability for full-year forecasts to be revised upward again, to be proceeded by the upward revision already made once. Meanwhile, given such a strength in recent trading, the Company has decided to increase planned annual dividend for FY02/20225 up to ¥10 per share (from ¥8 per share) , implying payout ratio of 38.8%. According to the Company, sales are increasingly posted in line with a steady progress made in operations to complete existing large-scales projects, while this is generating sales-increase effect for earnings. At the same time, there is a trend of expansion also for order intake in line with increasing demand associated with EXPO 2025 OSAKA/KANSAI (to be held during 13 April to 13 October in 2025) and redevelopment in urban areas. For example, the Company has posted sales of ¥1,179m (up 186.0% YoY and/or 14.4% of total sales) in its Osaka Sales Office, while sales are to remain buoyant also for H2. We are to have an interview with the management to obtain further details in order to update our Company Report and release afresh.

On 11 October 2024, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 to Q2 FY02/2025 results. It has been revealed that the Company is seeing a steady increase in sales and earnings in line with assumptions of full-year Company forecasts. Sales in Japan, the mainstay by region, are suffering from a stagnation in auto production volume, but benefiting a substantial rise in sales of hard disk surface lubricants for Q1, which was followed by a further strength for Q2. At the same time, the Company has posted sales for a large-sized project to deliver wastewater treatment equipment via its subsidiary. In other words, there is an aspect that the Company’s product portfolio is exposed to “diverse applications”, which is regarded as one of the Company’s advantages. We are to attend the results briefing via webcast (scheduled for 21 October 2024) and then interview with the management for further details, so that we should be able to update our Company Report in light of the content of both and release afresh.

MUGEN ESTATE, running purchase and resale of pre-owned real estate mostly in the Tokyo metropolitan area, continues to show solid performance. In light of the significant momentum in sales and operating profit, the Company's performance continues to “outperform” the strength of the real estate market. The Company's performance for Q1 to Q2 FY12/2024 suggests that assumptions of full-year Company forecasts were exceeded, but full-year Company forecasts have remained unchanged, presumably from a conservative perspective. Meanwhile, the purchase amount for Q1 to Q2 came in at no less than \25,295m (up 39.4% YoY) and real estate for sale outstanding (inventory) as of the end of Q2 has remained at a high level. As well, the Company is making a steady progress in its policy to enhance its sales force, while beginning to do so also for another policy to make its competitive business model to horizontally expand region-wise, having already posted sales in some part of the operations. At the moment, the Company is in the process of formulating its new midterm management plan to be followed by the existing one, the second midterm management plan (FY12/2022 to FY12/2024). As far as we could see, the Company is to release its new midterm management plan, when the actual results of FY12/2024 are confirmed, including impact of a horizontal expansion region-wise as well as the operations of asset management to start up in the near future.

TOW, which focuses on the development of planning & producing for sophisticated integrated promotions, is currently in the process of taking a step forward in its performance after recovering from the COVID-19 pandemic. Meanwhile, the Company is also preparing for a major leap forward from a longer-term perspective at the same time. In terms of the FY06/2024 results, a return to real-world events has been in full swing throughout the year and street promotions, particularly for beverages and cosmetics, have become increasingly active. Furthermore, the Company’s performance has benefited from a major automotive exhibition held every other year as well as large-scale events of IP content and local administration, having regained the levels of performance prior to the COVID-19 pandemic. Meanwhile, for FY06/2025, the Company plans to enforce strategic investments aimed at increasing its sustainable growth potential in the long-term future. On top of aggressively investing in human capital, the Company is keen on development associated with AI and environment raised as the key themes for the future. In a sense, FY06/2025 Company forecasts are going for a rather limited increase in sales, but it should be the case for the latest strategic investments will drive the Company’s sales from a longer-term perspective.

NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers for private homes, is entering a phase of recovery in its short-term performance. The Company has inevitably posted an operating loss for the actual results of Q1 to Q2 FY12/2024, which is however to be followed by the turnaround for H2 over the period of Q1 to Q2, when the Company suffered from a major negative factor for earnings stemming from stagnation in the number of units sold for its products with respect to the domestic and foreign operations. Meanwhile, the Company is now looking to a changeover to a year-on-year increase in the number of units sold for its products in the domestic operations for H2, which is to drive the Company’s earnings. At the same time, the Company is looking to an improved trend in the number of units sold for its products in the foreign operations, but not as much as resulting in an increase in earnings. Meanwhile, Satoshi Haramaki, the Company’s president & CEO, has reiterated measures to achieve the managerial goals of its midterm management plan, V-Plan 26 (announced on 14 February 2024), at the Q1 to Q2 results briefing (video streaming available in Japanese), calling for prospective sales of \230,000m and operating profit of \9,000m for FY12/2026, the final year of the plan, which implies CAGR of 4.4% in sales and 32.8% in operating profit, when setting the actual results of FY12/2023 as the point of origin. The Company is also calling for prospective ROE of 6% or higher (versus 0.7% for the actual results of FY12/2023) for FY12/2026, the final year of the plan.

INTERLIFE HOLDINGS, running operations of interior construction and designing/construction of sound & lighting facilities, is seeing a firm performance in the short term, which looks being followed by sustainable growth from a long-term perspective. On top of an improvement in operating profit margin as a result of the Company’s policy to review its business portfolio, it is now posting sales of large-sized construction projects at the same time, having brought in a significant increase in sales and earnings for the actual results of Q1 FY02/2025. Meanwhile, FY02/2025 initial Company forecasts have been revised upward in light of recent trading running ahead of initial assumptions. In particular, the Company suggests that it benefits from concentrated completions of work associated with EXPO 2025 OSAKA/ KANSAI for H2 as well as strengths in order intake associated with redevelopment projects in central urban areas. The Company’s Osaka Sales Branch has worked so well in steadily capturing construction demand created by a holding of EXPO 2025 OSAKA/KANSAI, while the Company is keen on doing so also for OSAKA Integrated Resort, i.e., a scheme scheduled to open in the fall of 2030. Meanwhile, the Company advocates to “evolve and renew business model via innovations with an objective of acquiring a position to pursue growth in the next phase” as its basic policy of the existing midterm management plan (FY02/2023 to FY02/2025), while planning to further focus on this basic policy for FY02/2026 and thereafter, as well as aggressively investing in human capital and so on, in order to realize a changeover to the new phase of growth.

On 5 September 2024, SENSHU ELECTRIC, which focuses on development of its business as electric wires general trading company, released its Q1 to Q3 FY10/2024 results. It has been revealed that the Company is making steady progress toward meeting its full-year forecasts, which have been revised up at the stage of the Q1 results and then also at the stage of the Q2 results. With respect to FA cables, the Company's main source of earnings, there is a stagnation in some part of demand associated with semiconductor production equipment and machine tools, but demand associated with auto production lines is buoyant, according to the Company. As well, the Company also suggests that it perceives a mix sentiment amongst each of sale destinations for demand associated with semiconductor production equipment. Thus, it appears to take some more time for the said demand to see a recover across the board. Meanwhile, the Company suggests that it is seeing an improved gross profit margin for power cables to satisfy demand associated with construction. In the first place, there is an aspect that the shortage of the merchandises is persisting, while the Company is successfully passing on an increase in Copper Prices to selling prices of own power cables. In conclusion, it appears that the Company benefits from a firmness in selling prices.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, sees short-term operating profit margin being under pressure, but going for a recovery on a full-year basis for FY02/2025, which is to be followed by a further improvement in the longer term. For the actual results of Q1 FY02/2025, the Company has achieved an increase in sales and gross profit as well as an improvement in gross profit margin over the same period of the previous year, but operating profit margin has declined as the impact of increased SG&A expenses was more than offsetting. With an objective of driving long-term growth potential, the Company has newly consolidated foreign subsidiaries, which is a factor for the increase in SG&A expenses, while having intensively posted expenses on a R&D project at the same time. Most recently, sales of hard disk surface lubricants, carrying high gross profit margin, are entering a recovery phase, but this was not sufficient enough to more than compensate for the increase in SG&A expenses with respect to the Q1 results, according to the Company. From a mid-term perspective, meanwhile, the Company expects a gradual increase of contribution to earnings from the said new subsidiaries. Longer-term, the Company is looking to its operations to manufacture and sell sealants to make perovskite solar cells commercially viable as well as anticipating those of developing, manufacturing and selling epoch-making cosmetics empowered by its proprietary technology of nanoemulsion (MORESCO-NANOREACH) to contribute to the performance.

On 9 August 2024, EM SYSTEMS, which develops and sells IT systems of mission-critical tasks for pharmacies as the leader in Japan, released its Q1 to Q2 FY12/2024 results. It has been revealed that EBITDA is increasing significantly. Sales came in at \10,989m (up 11.9% YoY) and operating profit \1,221m (up 6.7%), while EBITDA \2,231m (up 38.3%). At the operating level, the Company has reflected defrayments of depreciation charge, software write-off and amortization of goodwill associated with the implementation of M&A deals as well as one-time expenses incurred by system failures during the relevant period, while EBITDA to imply an underlying trend of earnings, having not reflected any of all those defrayments, has risen sharply. Sales have renewed record high, including recurring income, as a result of increase in the number of customers, driven by a couple of acquisitions for sector peer companies on the mainstay Pharmacies side. Meanwhile, given actual results better than initially expected, the Company is now going for interim dividend of ¥9.00 per share versus planned interim dividend of ¥7.00 as of initial Company forecasts.

On 6 August 2024, Sanyo Homes, running operations to build houses on a contract basis and develop condos for sale, released its Q1 FY03/2025 results. It has been revealed that gross profit margin has risen to a level that exceeds assumptions of Company forecasts. FY03/2025 Company forecasts assume gross profit margin of 18.9%, while the Company saw 20.2% (up 3.2% points YoY) for the actual results of Q1. With respect to the operations to build houses on a contract basis, sales are starting to get posted for properties that saw order intake after price revision aimed at reflecting rising costs of materials and labor, while it appears being the case for the operations to develop condos for sale that the Company benefits from a tight supply-demand balance in sale of completed condos, backed by ongoing strengths in the market for condos, although there were no completions and thus no sales in regards to properties newly completed. Meanwhile, the Company, having newly adopted a vision statement, saying that we will continue to be “an absolutely essential presence in society”, won Japan Resilience Award for the fourth consecutive year during the period of Q1, as well as having won the House of the Year in Energy Award for the ninth consecutive year at the same time.

On 9 August 2024, HAGIWARA ELECTRIC HOLDINGS, running its operations as a technology-oriented trading house of auto electronics, released its Q1 FY03/2025 results. It has been revealed that sales are keeping up high growth, driven by successful acquisition of new customers on the mainstay Electronic Devices side (mainly sale of semiconductors, electronic components and so on to tier one automotive suppliers), which is followed by posting of addon sales stemming from them. A weakness is going on with respect to auto production volume or final destination of demand, but this is far more than compensated for by an increase in the market share for the Company, as far as we could gather. The strengths in sales are driving earnings, as is taken for granted, but the Company is seeing a decline in earnings. On top of the fact that spot profit, intensively posted as much as some ¥150m during the same period of the previous year, is not reappearing, the Company is proactively spending on human resources and system renewals to ensure growth in the future. On the Technology Solutions side with the key domain of embedded solutions, the Company is now in the phase of short-term adjustment for performance, negatively affected by sluggishness of the market conditions in China. At the same time, however, the press release, made on 17 July 2024, suggests an improved probability for provision of solutions based on data platform to take off in earnest, with the fact that the Company has consolidated DellaDati PTE.LTD as subsidiary.

On 9 August 2024, MUGEN ESTATE, running operations to purchase and resell pre-owned real estate mostly in the Tokyo metropolitan area, released its Q1 to Q2 FY12/2024 results. It has been revealed that sales are expanding faster than expected for large investment-oriented properties which carry high gross profit margin. Consequently, the Company saw 73.3% of prospective full-year operating profit having been achieved at this stage. Meanwhile, it is suggested that the Company is increasing its purchases of properties, those of investment-oriented in particular. For the actual results of Q1 to Q2, the total amount of properties purchased came in at ¥25,295m (up 39.4% YoY), of which those of investment-oriented equated to \11,339m (up 79.0%), according to the Company. Meanwhile, with an objective of achieving growth from a long-term perspective, the Company has continued amplifying its sales force, while implementing measures to expand region-wise at the same time. We are to have an interview with the management to obtain further details in order to update our Company Report and release afresh.

On 8 August 2024, NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers for private homes, released its Q1 to Q2 FY12/2024 results. It has been revealed that the results were below expectations of initial Company forecasts. However, sales volume and the like are to see a recovery for H2, which is to result in a year-on-year increase in sales and earnings during the relevant period. In Japan, sales are firm for non-residential applications (business-grade gas water heaters & oil-fired boilers) and kitchen appliances (e.g., built-in stove burners), but this is not substantial enough to compensate for slowing sales of the mainstay gas water heaters & oil-fired boilers for private homes due mainly to a weakness in the market for housing. For foreign operations, meanwhile, the Company suffers from deteriorating market conditions in China and rising costs, while having suffered from a decline of earnings in North America as a result of stagnated sales of heating boilers, according to the Company. In China, earnings have declined a lot in line with a decline in sales and a major decline of operating profit margin in North America. We are to have an interview with the management to obtain further details in order to update our Company Report and release afresh.

On 9 August 2024, YAMABIKO, which develops, manufactures and sells a variety of products belonging to Outdoor Power Equipment, Agricultural Machinery and Industrial Machinery, released its Q1 to Q2 FY12/2024 results. It has been revealed that the mainstay Outdoor Power Equipment (OPE) is seeing buoyant sales in the Americas. Assumptions of initial Company forecasts were exceeded and FY12/2024 Company forecasts have been revised up. In the Americas, the Company notes that sales of OPE are firm in particular for those of being delivered to home improvement retailers. During the period of Q2, the Company has succeeded in its measures of promoting local sales, including that of making a TV advertisement, while the local market environment has remained favorable with ongoing strengths of consumer spending. On top of this, the Company has also benefited from yen’s weakness. Initial Company forecasts assumed exchange rates of \140 per US dollar and \150 per euro, while the Company saw yen weaker for both for the actual results of Q1 to Q2. Still, Company forecasts, after the upward revision, also assume exchange rates of \140 per US dollar and \150 per euro for H2, in light of the recent instability of exchange rates.

On 8 August 2024, TOW, which dedicates to planning and producing of hands-on integrated promotions, released its FY06/2024 results. It has been revealed that the move back to real-world events is in full swing and the Company saw an increase in sales as high as almost 50% over the previous year. In addition to the accelerated pace of street promotions, particularly amongst advertisers of beverages and cosmetics, the Company also benefited from posting of sales associated with biennial holding of a major automotive exhibition. Furthermore, the Company also posted sales associated with holding of large events related to IP contents (e.g., popular characters) and government at the same time. Meanwhile, cost of sales and SG&A expenses have also risen significantly, yet the Company has achieved operating profit margin of 11.5% (up 1.7% points). The Company notes that various expenses, such as strategic investment in human capital, to achieve sustainable growth, were fully implemented for H2, while there was an aspect that it has seen an improvement in profitability due to expansion of highly value-added fee-based operations and in-house production on a group basis. We are to interview with the Company's management to obtain further details, so that we should be able to update our Company Report and release afresh.

On 9 August 2024, Shinwa, which mainly manufactures, sells and constructs scaffoldings, used at fields of construction work, released its Q1 FY03/2025 results. It has been revealed that the Company is already seeing favorable results stemming from consolidation of YAGUMI Group, i.e., one of Japan’s largest operators to construct scaffoldings, as subsidiary, since the beginning of Q1, while the Company is looking to outcome to prevail further in the future. The Company is seeing a net increase in revenue more than a certain level as well as in earnings and a startup for synergy to appear at the same time. According to the Company, a new sales channel has been created as a result of business integration by the end of Q1, which is to be followed by posting of revenue for Q2 with respect to this new development. Going forward, it appears that the Company is to see ongoing expansion in new opportunities of posting revenue, including those of new services, driven by further progress to be made in business integration. The Company advocates its policy to forge a solid value chain “from manufacture to construction” for scaffoldings.

On 31 July 2024, DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices mainly used for prevention of hospital-acquired infections and postoperative pain control, released its Q1 FY03/2025 results. It has been revealed that the Company is seeing a promising rise in sales of AMY, belonging to the Infusion Pumps side which is responsible for postoperative pain control. According to the Company, AMY holds relative superiority over equivalent products of its sector peer companies in terms of both costs and functions with a distinguished feature of being based on its proprietary micropumps, implying a good opportunity for sales to surge for the future in line with a progress made in awareness building activities. To date, AMY has been adopted by home treatment, painless delivery and so on, while the Company is calling for a future potential market size of no less than some ¥6,000m for AMY in Japan, assuming a full-scale adoption by acute hospitals. On top of this, the Company is currently in the process of launching AMY in Europe, implying a probability to obtain MDR (Medical Device Regulation) certification by the end of Q2 (July to September), while having been already working with an alliance partner to establish local sales channels for some time. The Company is calling for a future potential market size of no less than some ¥30,000m for AMY in Europe.

HAGIWARA ELECTRIC HOLDINGS, running its operations as a technology-oriented trading house of auto electronics, is in the process of a business model shift, while revealing its intention to make it a driver to enhance its business valuation from a long-term perspective. For example, the Company is working to create new business models, e.g., data platform business to materialize technology valorization of data with a profitability. During the period of its midterm management plan (FY03/2025 to FY03/2027), the Company is to push forward with structural changes to make the leap for next stage of growth and actions to erect business foundations as An Engineering Solution Partner That Is Connecting Human, Society and Technology, Through Advanced Electronics. During the relevant period, the Company is calling for CAGR of 10.0% in sales and 12.6% in operating profit as well as ROE of 11.0% or higher (versus 9.9% for FY03/2024) for FY03/2027, the final year of the plan. Meanwhile, FY03/2025 Company forecasts are going for an on-going high growth in sales but operating profit margin under pressure. This is attributable to that sales are to be driven by those of being associated with operations to distribute semiconductors, electronic components and so on, i.e., those of carrying gross profit margin relatively lower out of the Company’s business portfolio. On top of this, the Company is to see an increase in expenses to ensure projected earnings assumed in the midterm management plan as well as implementing upfront investments to promote a business model shift. It appears that the Company is to see a bottom in operating profit margin for FY03/2025, which is to be followed by a V-shaped recovery for FY03/2026 and thereafter.

On 12 July 2024, INTERLIFE HOLDINGS, principally running operations of interior construction and those of installing sound & lighting facilities, released its Q1 FY02/2025 results. It has been revealed that the Company has achieved 96.5% of prospective operating profit, assumed in its full-year Company forecasts. According to the Company, it saw large-scale projects having been completed faster than expected as well as having made progress faster too, having resulted in an overshoot in sales, while having made steady progress in reducing expenses, mainly due to the success of measures to bring material transportation in-house and its focus on advanced procurement. The Company is strengthening sales activities at its Osaka Sales Office, in light of the potential for increased demand associated with EXPO 2025, the Osaka-Kansai Expo (13 April to 13 October 2025) and the Osaka Integrated Resort (IR), which Osaka-prefecture is advocating to hold in the fall of 2030. For FY02/2024, sales generated through the Osaka Sales Office accounted for some 10% of the Company's sales, while the trends since the beginning of FY02/2025 suggest that this ratio is on the rise. As well, the Company is to write off as many as 3,000,000 shares out of its treasury shares, equating to 14.99% of the number of shares outstanding prior to the deal, scheduled on 31 July 2024. We are to have an interview with the management for further information and initiate our Company Report to be followed by ongoing coverage by us.

NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers for private homes, is calling for a long-term growth via transformation of its business portfolio as the principal strategy. The Company's midterm management plan (FY12/2024 to FY12/2026) suggests CAGR of 4.4% in sales and 32.8% in operating profit. The Company is also calling for prospective ROE of 6.0% or higher (versus 0.7% for FY12/2023) for FY12/2026, the final year of the plan. It is assumed that sales on the Domestic Operations side to see CAGR of 3.4% during the relevant period and 6.4% on the Foreign Operations side. For the operations in Japan, the Company is to promote sales associated with non-residential applications (business-grade gas water heaters & oil-fired boilers) in the mainstay domain of water heaters & air, where the bulk of sales is of gas water hearers & oil-fired boilers for private homes, as well as promoting sales in the domain of kitchen appliances (e.g., built-in stove burners) at the same time. Meanwhile, for the operations in foreign countries, the Company is looking to an improvement of performance in China, i.e., a high growth rate in sales and earnings due to favorable sales promotions in the domain of kitchen appliances on top of that of the mainstay domain of water heaters & air. The midterm management plan assumes that the Domestic Operations side is to account for 62% of the Company’s net increase in earnings and the remaining 38% for the Foreign Operations side, of which 86% is to come from its operations in China.

Shinwa, which mainly manufactures and sells scaffoldings used at fields of construction work, has consolidated its sale destination of scaffoldings, YAGUMI Group, as wholly owned subsidiary following the acquisition of the shares, which is in charge of constructing scaffoldings as one of the largest in Japan and the largest class in the Tokai region, for the sake of achieving growth from a long-term perspective. The Company's midterm management plan (FY03/2025 to FY03/2029) is implying CAGR of 9.5% in revenue and 27.9% for operating profit. The Company saw a sluggishness in its organic growth or self-directive growth via utilization of resources accrued internally for the FY03/2024 actual results, due to construction material prices having remained high and construction operations having been delayed stemming from a labor scarcity in the construction industry, while the Company is now looking to a sustainable growth for the future together with the above-mentioned policy implemented. As well, for FY03/2025, the Company suggests that it will be able to regain growth on an organic basis. The Company is currently in the process of eagerly pursuing synergy attendant on the said deal, i.e., forging a solid value chain “from manufacture to construction” for scaffoldings, by means of making progress with integration of management, operations and consciousness between itself and YAGUMI Group.

TOW, which dedicates to planning and producing of hands-on integrated promotions, aims to achieve sustainable growth from a long-term perspective by means of driving two spindles, i.e., business growth and operational aspect. There is a significant momentum in the Company's performance for FY06/2024. It is now suggested that sales for Q4 (April to June) have risen almost 50% over the same period of the previous year. According to the Company, this is largely due to strengths in sales of large-scale events associated with IP contents (e.g., popular characters) and government. Meanwhile, the Company has been aggressively increasing its expenditures for future growth, represented by investments in human capital, which appears to result in sustainable growth for FY06/2025 and thereafter. As in Purpose, the Company is to "create experiences for a new era", while it advocates "designing results with experience value as the core" for business growth, which will drive "client expansion" and "domain expansion”. On the other hand, in terms of operational aspect, the Company will strengthen the foundation for "updating the environment and systems that enable its employees to work with vitality and enthusiasm”.

On 12 July 2024, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 FY02/2025 results. It has been revealed that sales of hard disc surface lubricants are now recovering. The hard disc surface lubricants, which are positioned as special lubricants used to lubricate the gap between hard disks and magnetic heads in hard disk drives, protect the information recorded on hard disks with a nano-level thin film and raise the reliability of hard disks, according to the Company. For Q1, demand related to investment in so-called data centers is showing a strength. More importantly, it is suggested that the recovery in sales of high value-added hard disc surface lubricants has generated a no negligible impact to the Company’s earnings as whole. In light of a tendency that investment in data centers is to continue to grow steadily over the long-term, it should be possible for the Company to see ongoing increase in sales of hard disc surface lubricants for the future, as far as we could gather. Meanwhile, there is an aspect that the Q1 results were negatively affected by a one-time increase in SG&A expenses and other issues and short-term operating profit margin is under pressure. We are to interview the Company's management for further details, so that we should be able to update our Company Report and release afresh.

SENSHU ELECTRIC, which focuses on development of its business as electric wires general trading company, has been seeing a favorable performance. For FY10/2024, the Company saw record-high earnings during the period of Q1 to Q2, which is to be followed by a frontloaded achievement of existing management objective for FY10/2026 on a full-year basis, i.e., recurring profit of \10,000m. Copper prices have been higher than assumed earlier, which is implied to be bringing in an addon to the Company’s performance. There is an aspect for higher copper prices to lower the Company’s gross profit margin in the short term, but this is more than compensated for by an increase in selling prices as a result of tight supply-demand balance for electric wires in the market, resulting in gross profit margin rather higher. Meanwhile, for FA cables, the key earnings pillar for the Company, the sentiment has remained weak, according to the Company. Demand has been sluggish from manufacturers of machines and robots that produce machine tools, automobiles, semiconductors, etc. However, the Company is looking to an opportunity of bottoming out and then recovery for such demand at some stage during the period of H2. The Company suggests that it will formulate renewed management objective from a long-term perspective, while planning to release the content in line with the release of the actual results of FY10/2024, as far as we could gather. For the sake of formulating renewed management objective, the Company says that it will check up near-future changes in copper prices, demand for FA cables as well as other issues.

Sanyo Homes, running operations to build houses on a contract basis and develop condos for sale, is beginning to see a full-fledged recovery for its performance, having had suffered from loss caused by the Corona disaster. The Company has newly adopted a vision statement, saying that we will continue to be an absolutely essential presence in society, while calling for a soaring performance during the period of its midterm management plan (FY03/2025 to FY03/2027), i.e., sales to rise 12.3% and operating profit 36.1% in terms of CAGR. For FY03/2027, the final year of the plan, the Company is calling for ROE of 10.0% (versus 4.4% for the actual results of FY03/2024) at the same time. There is an aspect that the Company used to refrain from purchasing lands to build condos for some time in light of uncertainty associated with the Corona disaster, which resulted in the number of condos completed only two for FY03/2023, which was however followed by seven for FY03/2024, when therefore the Company has returned to profitability. Meanwhile, the Company is now going for seven newly completed also for FY03/2025, while anticipating a recovery of profitability in its operations to build detached houses, residential apartments and welfare facilities at the same time. Sales of residential apartments and welfare facilities have declined sharply due to one-time factors for FY03/2024, which is to result in a recovery of sales for FY03/2025. Further, the Company is calling for a trend of soaring also in sales associated with detached houses, etc. for the foreseeable future.

On 26 June 2024, DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices mainly used for prevention of hospital-acquired infections and postoperative pain control, has begun delivering video on its financial results briefing for FY03/2024. It has been revealed that the Company is to see a long-term growth potential to accelerate in line with its policy to launch AMY on the Infusion Pumps side in charge of postoperative pain control, in Europe, having just seen a steady increase in earnings. The Company expects to obtain MDR (Medical Device Regulation) certification, which is essential for sales in Europe as early as this summer and is preparing to establish local sales channels through collaboration with an alliance partner. The potential market size of AMY in Europe is estimated at some \30,000m, while the Company plans to release its midterm management plan, assuming the impact of AMY’s launch in Europe, once it obtains the MDR certification. AMY, which is based on the Company's proprietary micropumps, is said to have an epoch-making advantage over comparable products in the market. In the longer term, the Company plans to enter new areas of business, such as diabetes treatment (insulin pumps), through application of the micropumps.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, plans to achieve sustainable growth from a long-term perspective, following a significant recovery in earnings for the actual results of FY02/2024. In light of the management target of its 10th midterm management plan (FY02/2025 to FY02/2027), which focuses on satisfying both of Realization of a Sustainable Society and Enhancement of Added Value for Business, the Company is calling for prospective CAGR of 6.0% in sales and 30.1% in earnings during the relevant period, while a level of ROE at 8% (versus 6.6% for FY02/2024) for FY02/2027, the final year of the plan. The Company is to dedicate itself to development, manufacture and sale of high value-added products to reduce environmental load, which is expected to result in the above-mentioned growth. Meanwhile, it was on 22 August 2023 that the Company has concluded a contract to acquire operations basically being related to autos from a trade based in the United States, which is also expected to drive the growth. Elsewhere, the Company is in the process of developing sealants to make perovskite solar cells commercially viable as well as proceeding with preparations for manufacture and sale at the same time, although the midterm management plan does not assume the impact from here. Furthermore, the Company is also looking to a future contribution from development, manufacture and sale of cosmetic products that compound nanoemulsion (MORESCO-NANOREACH) to realize an epoch-making functionality. Thus, the Company is keen on deploying various efforts to create promising operations subsequently contributing after the period of the midterm management plan as well.

On 23 May 2024, KAGA ELECTRONICS, major electronic components trading company, held its on-the-web financial results briefing for FY03/2024. It has been revealed that gross profit margin has effectively remained unchanged from FY03/2023, although the Company suffers from the impact of inventory adjustments by its sale destinations of merchandises, i.e., customers. Meanwhile, for H2 FY03/2025, the Company is looking to a termination of inventory adjustments and thus Company forecasts are going for an increase in sales on a full-year basis. Still, the Company is to see a limited increase in sales as it will continue suffering from the impact of inventory adjustments for the time being and the same at the level of operating profit and/or recurring profit as well. By the way, from a long-term perspective, the Company has stated that its focus on EMS business is to drive its growth as a whole. In fact, the Company has begun its operations of new factory based in Mexico in April 2024, with an objective of capturing local demand in North America and Central & South America, calling for prospective sales of ¥50,000m to be generated from here in five years, which equates to almost 10% of the Company’s sales for FY03/2024.

On 10 May 2024, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its FY03/2024 results. It has been revealed that the Company returned to profitability and a further improvement is expected for income and expenses. On the Condo Business side in charge of developing condos for sale, the Company saw intensive new completions and thus sales for Q4 FY03/2024, which was the key contributor to the turnaround for the Company’s income and expenses on a full-year basis. Meanwhile, the Company sees that inventory (completed condos, condos in progress, etc.) still stands at a high level at the moment, implying a high probability for sales and operating profit on the Condo Business side to remain at a high level for FY03/2025. At the same time, it appears that an improvement in income and expenses is expected also on the Housing Business side in charge of operations to build housings on a contract basis. Elsewhere, the Company has newly instituted a vision statement that goes "we will continue to be absolutely crucial for society,” while reiterating that it aims at a sustainable enhancement of corporate value by means of developing its business based on the slogan that goes "homes that delight people and the earth," as the cornerstone of management. At the same time, the Company has introduced a stock compensation plan for employees as investments in human capital, which is expected to continue providing an environment in which each of them can fully demonstrate own performance. We are to attend the Company’s results briefing to be held on Thursday, 30 May, while planning to interview with the management so that we should be able to update our Company Report to release afresh.

On 15 May 2024, TOW, which dedicates to planning and producing of integrated promotions with a strong experiential (hands-on) focus, released its Q1 to Q3 FY06/2024 results. It has been revealed that recovery of performance is accelerating, driven by that of real-world events. In terms of earnings, the Company sees a high rate of progress against full-year Company forecasts and thus a revision is currently under review for prospective full-year performance. It has been stated that an announcement would be made as soon as the near-term prospects are convinced. In our estimates, the Company continues benefiting from strengths associated with beverages as it has been the case for Q2, while sales of events associated with IP contents, etc. are kicking in, according to the Company. Meanwhile, the Company is now carrying out policy measures at the same time, represented by strategical investments in human capital, to ensure a growth from long-term perspective. We are to interview with the Company's management to obtain further details, so that we should be able to update our Company Report and release afresh.

On 10 May 2024, MUGEN ESTATE, running operations to purchase and resell pre-owned real estate mostly in the Tokyo metropolitan area, released its Q1 FY12/2024 results. It has been revealed that full-year Company forecasts are to be met, although the Company has suffered from a weakness in the short-term results. According to the Company, the market for investment-oriented real estate continues showing a strength, but sales had been rather stagnated for Q1, because of its strategy to focus on profitability, etc. More importantly, however, the Company has laid out a policy to enhance sales promotions for Q2 and thereafter. For Q1, there was another issue that the Company temporarily had a time of stagnation for posting sales of large-scale properties. Meanwhile, the Company has purchased properties as much as equating 31.2% of full-year agenda, implying a promising start. In conclusion, the Company’s real estate for sale outstanding (inventory) has risen. For Q2 and thereafter, it appears that the Company is to raise inventory turnover, which is expected to drive sales and earnings in the near future.

On 13 May 2024, YAMABIKO, which develops, manufactures and sells a variety of products belonging to Outdoor Power Equipment, Agricultural Machinery and Industrial Machinery, released its Q1 FY12/2024 results. It has been revealed that sales in North America are growing steadily due to lively consumer spending. The Company appears seeing performance rather better than assumptions of FY12/2024 Company forecasts, partly attributable to yen weaker than expected. On the Outdoor Power Equipment side, the mainstay by segment, demand from general users or consumers (dwellers at housing) is picking up nicely for trimmers, chain saws and power blowers, with which they do garden care such as lawn mowing, which is driving the Company’s sales to local home improvement centers. For the actual results of Q1, yen got deprecated a lot, i.e., to the levels more depreciated than assumptions of Company forecasts (¥140 per US$ and ¥150 per euro). As far as assuming that such a circumstance persists toward the end of the year, Company forecasts are likely to be exceeded to a corresponding extent.

On 14 May 2024, NORITZ, which manufactures and sells products belonging to the category of Water Heaters (gas water heaters and oil-fired boilers) and that of Kitchen Appliances, released its Q1 FY12/2024 results. It has been revealed that the short-term performance is unfavorable but that the Company is planning to see a sustainable growth from a long-term perspective at the same time. The Company’s midterm management plan, V Plan 26, is calling for prospective CAGR of 4.4% in sales and 32.8% in operating profit, which is expected to lead to ROE of 6.0% or higher for the final year of the plan, i.e., FY12/2026, versus 0.7% for the actual results of FY12/2023. Meanwhile, the Company suggests that the actual results of Q1 were line with assumptions of FY12/2024 Company forecasts. It appears that sales on the Domestic Business side have inevitably suffered from a recoil reduction stemming from concentrated sales due to one-time factors during the same period of the previous year, which led to a major decline in earnings. Still, prospects of recovery in earnings for H2 have remained unchanged, according to the Company. We are to interview with Satoshi Haramaki, the Company’s President and CEO, to discuss the details of V Plan 26, which is to be followed by distribution of our Company Report, based on the interview, and thus ongoing coverage of the Company.

On 14 May 2024, EM SYSTEMS, which develops and sells IT systems of mission-critical tasks for pharmacies as the leader in Japan, released its Q1 FY12/2024 results. It has been revealed that the KPIs, i.e., recurring income, number of licenses and EBITDA are all performing well due to the impact of M&As. Two M&A deals were completed during the last year (FY12/2023) and sales for Q1 have risen to a corresponding extent on a net basis, while EBITDA came in at \1,230m (up 15.0%), according to the Company’s estimates. At the same time, the Company has unexpectedly suffered from booking of a provision for system failures due to leap day, etc. during the period of Q1, but it was more than compensated for by demand firmer than expected with respect to introduction of electronic prescription systems. As a result, it is suggested that recent trading is running ahead of assumptions of FY12/2024 initial Company forecasts.

On 10 May 2024, Shinwa, which mainly manufactures and sells scaffolding equipment (system scaffoldings), released its FY03/2024 results. It has been revealed that the Company was forced to suffer from an adjustment in revenue and earnings due to unfavorable factors of external environment, but prospects are buoyant, according to its midterm management plan (FY03/2025 to FY03/2029), newly formulated and disclosed. Although it was inevitable for FY03/2024 to suffer from a major decline in revenue under grim circumstances of construction personnel shortage, the Company claims that it has made a steady progress in initiatives to drive earnings in the following years. The midterm management plan is calling for prospective CAGR of 9.5% for revenue and 27.9% for earnings toward FY03/2029, the final year of the plan, when setting the actual results of FY03/2024 as the point of origin. On top of an organic growth, the plan assumes addons stemming from consolidation of CTR Corporation (YAGUMI Group: one of Japan’s leading company to provide services to construct scaffolding equipment) from the beginning of the first year, i.e., FY03/2025. In fact, the Company has set a target to pursue synergy by means of creating solid value chain to cover the operations of “manufacturing to services to construct” with respect to scaffolding equipment (system scaffoldings) on this occasion of the said consolidation. We are resuming coverage of the Company with this Results Update, while planning to interview with the Company’s management to update our Company Report to release afresh.

MUGEN ESTATE, running operations to purchase and resell pre-owned real estate mostly in the Tokyo metropolitan area, has been successfully expanding sales of residential real estate (purchase and resale of pre-owned condos on a unit-by-unit basis, etc.), which is to be followed by buoyant sales of investment-oriented real estate (purchase and resale of pre-owned condos on a single building basis, etc.) for FY12/2024, in line with a new policy to focus on the said operations, in light of the current state in the real estate market. As of the beginning of the fiscal year, real estate for sale (inventory) stood at a level only edged up over the previous year, but it appears that the Company is trying to get at steady increase in sales and earnings by means of raising inventory turnover with a decent respect to profitability where the trend of real estate market is well considered, as it did for FY12/2023. In fact, the Company is keen on raising inventory turn over from a long-term perspective, while the Company is planning to raise amount of purchase for real estate by more than 30% on a year-on-year basis for FY12/2024, implying that the Company is likely seeing a trend of ever increasing for its business performance from a long-term perspective. By the way, it appears that the Company is to release its next midterm management plan (FY12/2025 to FY12/2027) at the stage of announcing the actual results for FY12/2024 to reveal its prospective performance toward FY12/2027, the final year of the plan.

On 12 April 2024, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its FY02/2024 results. It has been revealed that earnings are surging and the Company is implementing measures to realize steady growth from a long-term perspective at the same time. In addition to Japan, the mainstay by region, the Company is seeing a favorable recovery in earnings in Southeast/South Asia (Thailand, Indonesia and India) and North America, far more than compensating for sluggish performance in China, where a recovery of local demand is delayed. Meanwhile, the Company has released its 10th Midterm Management Plan (FY02/2025 to FY02/2027) to focus on satisfying both of Realization of a Sustainable Society and Enhancement of Added Value of Business as the theme, implying CAGR of 6.0% in sales and 30.1% in operating profit as an anticipated rate of growth with its management performance target. Thus, it appears that the above-mentioned Enhancement of Added Value of Business has a lot to do with the Company’s policy to proactively improve sales mix, going forward. We are to attend the results briefing via webcast (scheduled for 22 April 2024) and then interview the Company's management for further details, so that we should be able to update our Company Report in light of the content of both and release afresh.

YAMABIKO, which develops, manufactures and sells a variety of products belonging to Outdoor Power Equipment, Agricultural Machinery and Industrial Machinery, is to see a recovery of sales in the Americas, the mainstay by region, for FY12/2024 over FY12/2023. At the same time, the Company is to see an acceleration in sales growth rate on the Industrial Machinery side. In the actual results for FY12/2023, sales on the Outdoor Power Equipment side, the mainstay by business, were stagnating and thus the Company’s sales as well. The Company suffered from a recoil reduction in demand associated with stay-at-home trend stemming from the impact of Corona disaster in the Americas as well as unfavorable weather conditions during demand season. However, the Company saw operating profit highest ever, driven by an improvement in gross profit margin, which was far more than compensating. The Company states that it has made a steady progress in “sale of high-margin inventory built up in North America during the previous year, ongoing cost cutting and revision on selling prices in Japan and overseas.” Meanwhile, for FY12/2024, the Company is going for an increase in sales due mainly to a progress made for optimizing of inventory levels at distributors in North America. Furthermore, the Company expects an increase in earnings as a result of “full-year impact of revision of selling prices, a review of product mix and lower ocean freight rate.” Still, the Company is to see an increase in expenses at the same time as it is to aggressively invest for growth from a long-term perspective, e.g., in “developments of new business and/or new product, those of IT system and those of marketing.” The Company is currently in the process of propelling “growth in existing domains and monetization of new business,” calling for prospective sales of \250,000m for FY12/2030, implying CAGR of 7.4%, when setting the actual results for FY12/2023 as the point of origin.

TOW, which dedicates to planning and producing of integrated promotions with a strong experiential (hands-on) focus, is seeing a remarkable recovery in its business performance, having had gone through the impact of Corona disaster. Sales and earnings have risen sharply, due mainly to a benefit on the Real-World Events side, the mainstay by category of operations, stemming from large-scale exhibitions, represented by the JAPAN MOBILITY SHOW 2023 (open to the public from 28 October to 5 November 2023 / formerly the Tokyo Motor Show) being held in conjunction with full-scale revitalization of socioeconomic activities and lifestyle behaviors. The Company suggests that it saw a recovery of its business performance up to almost as high as a level prior to the impact of Corona disaster for the actual results of Q1 to Q2 (July to December) FY06/2024. Meanwhile, it appears that the current assumptions of Company forecasts for H2 (January to June) are to be exceeded, in light of the latest trends of order intake. At the same time, the Company has revealed its policy to make aggressive investments for long-term growth. Principally, the Company is to strategically implement across-the-board pay increase, equating 6.7% in terms of average annual salary, from H2, with an objective of amplifying its human capital, which has a strong aspect as assets (sources to create value) with the Company, in line with its sustainability policy. On top of this, the Company is to aggressively invest in recruitment and training programs as well as propelling investments associated with its bolstering subjects, i.e., AI and Environment.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, has announced its 10th Midterm Management Plan (FY02/2025 to FY02/2027), revealing its policy to achieve long-term growth by means of satisfying both of Realization of a Sustainable Society and Enhancement of Added Value of Business. The management target is to see sales of \38,000m, operating profit of \2,700m and operating profit margin of 7.1% for FY02/2027, the final year of the plan. When setting the latest estimates for FY02/2024 as the point of origin, the Company is calling for CAGR of 6.1% in sales and 34.1% in operating profit during the relevant period and thus an improvement of operating profit margin by 3.6% points. The Company suggests that the measures to beef up its exposure to sales of MORESCO Green SX (MGS) Products will be contributing. With distinguished features in terms of energy conservation, environmental preservation, improvement of the work environment and reduction of CO2 emissions, some of the Company’s products are highly value-added and thus carry high gross profit margin, being defined as MGS Products, while the Company sets a target to see an exposure of 40% (versus 29% for the FY02/2023 results) in sales of MGS Products for FY02/2027. In conclusion, the Company plans to upgrade sales mix, while contributing to realization of a sustainable society at the same time.

On 21 February 2024, EM SYSTEMS, which develops and sells IT systems of mission-critical tasks for pharmacies as the leader in Japan, held its results briefing for FY12/2023. It has been revealed that the Company is to sustainably see a steady increase in its sales of recurring income on the mainstay Pharmacies side, having had acquired two trades in the same sector. Nevertheless, it will be unavoidable to suffer from a year-on-year adjustment in trading for Q1 (January to March) FY12/2024, due to a factor that one-time sales associated with obliged introduction of online eligibility verification systems during the same period of the previous year are not to reappear. Meanwhile, the Company, which is committed to proactive shareholder returns, increases dividend for the 13th consecutive year for FY12/2023, when excluding the impact of a change in accounting period. On top of this, the Company has disclosed a plan to conduct the largest-ever repurchase of own shares from 15 February to 30 December in 2024, i.e., the total acquisition being capped at \1,000m in terms of amount and 1.6m in terms of the number of shares, while the latter equating 2.26% of the total shares outstanding but for treasury shares. By the way, the Company is looking to an emerging contribution from a long-term perspective with its measure to horizontally apply its knowhow, etc., obtained on the mainstay Pharmacies side to the Clinics side and Long-Term Care/Welfare side.

On 21 February 2024, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released MORESCO 10th Midterm Management Plan (FY02/2025 to FY02/2027). The Company’s ”management objective” is to achieve sales of \38,000m, operating profit of \2,700m and operating profit margin of 7.1% for FY02/2027, the final year of the plan. When setting the latest estimates for FY02/2024 as the point of origin, the plan is calling for CAGR of 6.1% in sales and 34.1% in earnings during the relevant period, while operating profit margin is to rise by 3.6% points. Meanwhile, the plan advocates to satisfy both of Realization of Sustainable Society and Enhancement of Added Value with the Operations as the theme. One of the Company's basic policies under this theme is to Upgrade Product Portfolio (developing high-value-added products and expanding sales of all those products as well as responding to the circular economy), which is expected to make a significant contribution to the Company's future performance trends as far as we could see. By the way, the Company has also announced its plan to repurchase own shares, together with the above-mentioned announcement. The repurchase period is set from 1 March to 30 April 2024, while the Company plans to repurchase up to 0.87% of its total outstanding shares (excluding treasury shares) through a market purchase on the Tokyo Stock Exchange. We are to interview with the management to obtain further details and will update our Company Report, accordingly.

On 14 February 2024, MUGEN ESTATE, running operations to purchase and resell pre-owned real estate mainly in the Tokyo metropolitan area, released its FY12/2023 results. It has been revealed that operating profit doubled due mainly to the success of its focus on residential real estate (mainly purchase and resale of pre-owned condos on a unit-by-unit basis). Meanwhile, the Company, strengthening its efforts to provide proactive shareholder returns linked to business performance, has announced to raise its planned annual dividend for FY12/2023 from ¥53.00 to ¥63.00, implying payout ratio of 40.6%, at the release of the results, which is nothing but a surge, i.e., a remarkable more than threefold increase compared to the actual dividend of \20.00, implying payout ratio 30.0%, for FY12/2022. Meanwhile, for FY12/2024, the Company is to incrementally focus on investment-oriented real estate (mainly purchase and resale of pre-owned condos on a single building basis) in light of recent real estate market trends. The Company plans to purchase \44,448m (up 33.2% YoY) worth of properties for FY12/2024, while planning to purchase \24,947m (up 112.2%) worth of investment-oriented real estate. We are to interview with the management to obtain further details and will update our Company Report accordingly.

On 5 February 2024, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its Q1 to Q3 FY03/2024 results. It has been revealed that the Company is seeing steady sales of completed properties on the Condos Business side to develop condos for sale, while the number of buildings to be newly completed will surge for Q4. Meanwhile, this will result in recoding of sales for the said properties for which orders have been already placed and thus the Company is to return to profitability from FY03/2023 to FY03/2024. The Company also suggests that it will see ongoing new completions for FY03/2025, which is expected to lead to a further recovery for prospective earnings. Due to the fact that the Company had been holding off on starting new constructions given the impact of the Corona disaster for some time, the number of buildings newly completed for FY03/2023 was limited to no more than two for H2 (one for Q3 and one for Q4), while the number of buildings to be newly completed for FY03/2024 will increase up to seven, collectively, comprising one to have been already completed for Q2 and six to be completed for Q4.

On 8 February 2024, TOW, which dedicates to planning and producing of integrated promotions with a strong experiential focus, released its Q2 FY06/2024 results. It has been revealed that the Company is making steady progress in recovering its performance after the impact of the Corona disaster. Full-year Company forecasts have been revised up, due mainly to recovery of sales for the mainstay Real-World Events having been more significant than initially assumed. As of 2 February 2024, the Company's order backlog stood at no less than \14,301m (up 45.1% YoY) and the Company now assumes sales for H2 to also exceed assumptions of initial Company forecasts. More importantly, a further upward momentum is likely in light of strengths in the actual trends of order backlog. On the other hand, the Company is keen on making proactive investments for its growth from a long-term perspective, e.g., executing across-the-board pay increase by 6.7% in terms of average annual salary for its personnel or strategic investments in human capital based on its sustainability policy from the beginning of H2, as well as implementing measures to enhance hiring and investing in education and training at the same time. Further, the Company is to invest in the use of digital technology, including AI, as well as in the environmental area. We are to interview with the management on the web to discuss the issues more in-depth, so that we should be able to update our Company Report to release anew.

On 31 January 2024, DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices (some 85% being exposed to disposable ones in terms of sales) mainly used for prevention of hospital-acquired infections and postoperative pain control, released its Q1 to Q3 FY03/2024 results. It has been revealed that the Company is seeing higher sales volume due to an increase in the number of surgeries performed at the hospitals to purchase products from the Company, as well as benefiting from a steady progress made for spreading market penetration of new product, AMY, at the same time. The actual results for Q1 to Q3 were rather better than assumptions of initial Company forecasts and full-year Company forecasts have been revised up. Meanwhile, the Company, which advocates a payout ratio of 60% or more for shareholder returns, has decided to increase dividend in response to this upward revision. According to the Company, the spread of AMY's market penetration has just begun in the market of Japan, while there is a greater potential for markets overseas. In fact, the Company is preparing for the launch of AMY in Europe and other markets overseas, fulfilling the European Medical Device Regulation (MDR), while formulating long-term management plan that assumes the impact of the future spread of AMY in markets overseas, to be disclosed in time as far as we could see.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, plans to continue its steady growth from a long-term perspective, having renewed its record high earnings for the last two years in a row. At the same time, the Company has shown a willingness to return its abundant cash accumulated by its business activities to shareholders. The Company's midterm management plan (FY10/2024 to FY10/2026) suggests that it plans to achieve a CAGR of at least 6.3% for sales and 4.5% for recurring profit during the relevant period. With respect to risk factors for FY10/2024, the Company gives an example of uncertainty on the timing and degree of recovery for demand related to semiconductors and machine tools in addition to trends of copper prices. On top of this, the Company also presents another example of uncertainty on the future of supply-demand balance for power cables, which is currently so tight due to supply shortages. However, more importantly, the Company is trying to get at a steady outperformance relative to the market trends by leveraging its strengths on its framework of JUST IN TIME, "original products” and cable assembly. Meanwhile, the Company is now going for the 11th year to consecutively increase dividend with its plan to pay an annual dividend of ¥120 per share for FY10/2024, implying payout ratio of 34.1% and/or shareholder return rate of 48.1%, including the impact of planned share buyback during the relevant period. With the one for FY10/2024, the Company is to implement share buyback for 7 years in a row.

On 15 January 2024, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 to Q3 FY02/2024 results. It has been revealed that the Company achieved a two-fold increase in operating profit over the same period of the previous year, due to a significant improvement in profitability in Japan, the mainstay by region. Sales volume has rather declined in Japan over the same period of the previous year, but it was far more than compensated for by the impact of an improvement in sales mix and a revision on selling prices of own products. On top of this, it appears that the Company has also benefited from a trend of settling down for raw material price hike. It has been also the case that a marked improvement in earnings was seen in Southeast/South Asia (Thailand, Indonesia and India). In addition to a steady increase in local sales volume against the backdrop of higher auto production volume, etc., the impact of a revision on selling prices of own products, as in Japan, was reportedly being felt. Nevertheless, the situation for Q4 (December to February) is unpredictable due to the possibility of initial costs associated with the start of operations at new factory in China, in addition to the inevitable deterioration in earnings due to seasonality. We are to obtain further details through our interview with the management, while planning to update our Company Report in light of such details in order to release anew.

TOW, which dedicates to planning and producing of integrated promotions with a strong experiential focus, is on track to achieve a recovery in its performance after the Corona disaster. With respect to the performance for FY06/2024, the Company saw both sales and earnings substantially increased over the same period of the previous year for the actual results of Q1 (July to September), which is expected to be followed by an acceleration in sales growth rate and operating profit margin rising up to 14.4% for Q2 (October to December). The Company suggests that it is steadily capturing recovering demand on the mainstay Real-World Events side. The long-restrained socioeconomic & living activities, which had been halted in the aftermath of the Corona disaster, are now being revitalized and the same trend can be seen in real-world events such as street promotions and exhibitions. When the Company announces the results for Q1 to Q2 (July to December), scheduled for 8 February 2024, it plans to disclose its forecasts for H2 (January to June), taking into account recent trading as well as reconsidering the levels of investment budget associated with its measures to integrate existing real-world events and online promotions to have been fostered for some time, which is expected to enhance the Company’s growth potential from a long-term perspective.

On 18 December 2023, TOW, planning and producing integrated promotions with strengths on the experience horizon, revised up its Q1 to Q2 FY06/2024 Company forecasts. It has been revealed that sales during the relevant period (July to December) are now expected to rise 45.5% over the same period of the previous year, benefiting from full-fledged revitalization of socioeconomic activities and everyday life activities. The Company suggests that it is steadily capturing the rapidly growing demand for Real-World Events such as street promotions and exhibitions. Meanwhile, full-year Company forecasts have remained unchanged. The Company says that it is currently in the process of reviewing its forecasts for H2 (January to June) and will disclose outcome of the review at the release of Q2 results, scheduled for 8 February 2024.

On 27 November 2023, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, held its financial results briefing for Q1 to Q2 FY03/2024. It has been revealed that the Condos Business side, which runs operations to develops condos for sale, is on track to generate significant momentum. While the Company completed only two new condos for FY03/2023, it expects to complete 7 new condos for FY03/2024. Following the completion of one property for Q2 (July to September), the Company expects to complete 6 new properties by the end of the fiscal year. Meanwhile, order intake on the Condos Business side for Q1 to Q2 has increased more than 50% over the same period of the previous year, which will realize a large increase in sales from the delivery of newly completed properties toward the end of the fiscal year. On the Housing Business side, which runs operations to building housings on a contract basis, sales of renovation are firm, but sales of real estate solution (cluster housings for rent and welfare facilities) have been in the process of correction as well as order intake. Still, more importantly, the said weakness will be far more than compensated for by the strengths on the Condos Business side, which will enable the Company’s performance return to profitability from FY03/2023 to FY03/2024.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, is currently implementing its growth strategy from a long-term perspective. For recent trading, the Company is seeing a shift from downward trend to upward trend, while beginning to promote sales in the United States by means of leveraging the acquisition of business from a local trade as well as actively working on the development of sealants for next-generation solar cells. On 22 August 2023, the Company disclosed that it had signed a business acquisition agreement with CROSS, Inc., based in the United States, with which it is planning to beef up the share in the local market for diecasting lubricants, i.e., one of the key products on the mainstay Functional Fluids side, calling for some 15% in CY2030 versus some 3% in CY2022. Meanwhile, it was at the financial results briefing held on 16 October 2023 that the Company had revealed its plan to develop a prototype of sealants dedicated to perovskite solar cells by spring 2024 with the aim of making them commercially viable in three years or earlier. By the way, the Company is to release its new midterm management plan (FY02/2025 to FY02/2027) around February 2024. At this stage, it appears that the Company is to refer to the latest progress for all those issues to drive long-term growth on top of performance target during the relevant period.

On 1 December 2023, DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices (some 85% being exposed to disposable products in terms of sales) mainly used for prevention of hospital-acquired infections and postoperative pain control, held its financial results briefing for the actual results of Q1 to Q2 FY03/2024. It has been revealed that the recovery of performance is in full swing. The Company has been suffering from price competition due to the expiration of patents on its mainstay products, soaring material costs, the impact of the Corona disaster and higher procurement costs from overseas contract manufacturers due to yen’ weakness, which resulted in performance stagnated over the past five years or even longer. More importantly, however, the impact of the Company's Growth Strategies appears to be starting to emerge. The Company is shifting from its existing products to newly patented products such as AMY and Modified BYRON and focusing on in-house manufacturing, while announcing a policy to increase its gross profit margin up to some 50% in the future versus 41.3% for the actual results of Q1 to Q2. The Company has also begun formulating midterm management plan based on the said policy.

On 24 November 2023, KAGA ELECTRONICS, a major electronic components trading company, held its financial results briefing for Q1 to Q2 FY03/2024. It has been revealed that the Company sees underlying earnings having roughly unchanged from the same period of the previous year, although the results have shown a decrease in sales and earnings for Q1 to Q2. According to the Company, operating profit has achieved a level roughly unchanged from the same period of the previous year, when excluding the impacts of one-off factors, i.e., that of having lost sales of spot projects and that of having posted provision for doubtful accounts. Meanwhile, it appears that the Company’s in-house performance target was exceeded by some ¥15.0bn (6%) in sales and some ¥3.8bn (39%) in operating profit, but FY03/2024 initial Company forecasts have remained unchanged. The results were better for Q1, which was also the case for Q2. Still, the Company suggests that it should access near-term demand trends in light of the increasingly uncertain outlook, compared to the beginning of the year. Thus, the Company has decided to hold off on raising its full-year Company forecasts at this time. By the way, President Kado is boldly laying out a policy of focusing on EMS business in the pursuit of a long-term growth. New factory in Mexico is scheduled to be operational by April 2024, while the Company will continue to increase its production capacity overseas and in Japan, calling for prospective sales of ¥300bn in five years for the said business, doubled from the results for FY03/2023.

On 14 November 2023, TOW, planning and producing integrated promotions with strengths on the experience horizon, released its Q1 FY06/2024 results. It has been revealed that order intake is expanding rapidly for large-scale projects of sales promotions on the street and/or expositions as a result of full-fledged revitalization of socioeconomic and other activities after the Corona Disaster. With respect to the mainstay Real-World Events, sales have increased by no less than 57.1% over the same period of the previous year, having accounted for 71.5% of the Company’s sales. According to the Company, it was necessary to intensively allocate own management resources, represented by human resources, upon the operations, which has led to an aspect of stagnated sales for Online Promotions. Nevertheless, sales have increased by 40.6% as a whole for the Company, implying that the Company is seeing performance better than assumptions of Company forecasts. We are to have an interview with the management on the web to discuss the issues more in-depth, so that we should be able to update our Company Report: TOW (4767) Online Promotions (6 October 2023) and release afresh.

On 13 November 2023, YAMABIKO, developing, manufacturing and selling outdoor power equipment (OPE) as the mainstay, released its Q1 to Q3 FY12/2023 results. It has been revealed that record-high earnings are renewed for the actual results of Q1 to Q3. At the same time, full-year Company forecasts are going for the same. The Company’s sales are rather stagnating particularly in Japan, but earnings are driven by a steady progress in sale of highly profitable inventory built up as of the end of FY12/2022, yen’s depreciation and some other factors. Meanwhile, the Company is going for a steady performance from a long-term perspective as found in Midterm Management Plan 2025 (FY12/2023 to FY12/2025), announced on 13 February 2023, which is calling for CAGR of 2.9% in sales and 11.1% in earnings, when setting the FY12/2022 results as the point of origin. Assuming this target is to be met, the Company is to see ROE of 10.0% (versus 8.6% for FY12/2022) for the final year of the plan, i.e., FY12/2025.

On 14 November 2023, MUGEN ESTATE, running operations to purchase and resell secondhand real estate mainly in the Tokyo metropolitan area, released its Q1 to Q3 FY12/2023 results. It has been revealed that notably large momentum is persisting for its performance, while the Company is now accelerating its measures to horizontally expand region-wise for the operations to purchase and resell. On 12 May 2023, the Company newly set up Osaka Sales Office (Kita-ku, Osaka-city) with the aim of penetrating into western Japan, which is expected to be followed by ones in Nagoya-city, Fukuoka-city and Sapporo-city from January 2024 onward. According to the Company, it hopes to enhance its long-term growth potential through sustained deepening of its involvement with active secondhand real estate transactions in all those government-designated cities. Meanwhile, FY12/2023 Company forecasts have been revised up, on 7 November 2023, due to a reason that the Company is well capturing steady demand for real estate in the market, having resulted in an upgrade of planned annual dividend per share from ¥43.00 to ¥53.00, implying payout ratio of 40.4%, based on its performance-based dividend policy to actively return earnings to shareholders, which has a target to realize payout ratio of 40% or more.

On 10 November 2023, EM SYSTEMS, developing and selling IT systems of mission-critical tasks for pharmacies as the leader in Japan, released its Q1 to Q3 FY12/2023 results. It has been revealed that the Company is making steady progress with its aggressive M&A activities. For example, the Company saw system usage fee sales for Q3 (July to September) increased by 38.1% over the same period of the previous year due mainly to the M&A results. At the same time, the Company suggests that it now sees its market share increased up to 43.0% on the IT Systems for Pharmacies side due to the same reason. Going forward, the Company is to thoroughly pursue economies of scale by promoting post-merger integration as well as further M&As being in sight for the sake of enhancing its overwhelming competitiveness even firmer than now. For FY12/2024, sales are to inevitably show little growth as sales associated with introduction of the online eligibility verification systems are not to reappear, but the Company suggests operating profit margin is to recover. This is due to a prospect for the Company to benefit from the M&A results on a full-year basis for its core operations, e.g., those of pursuing system usage fee sales, which are expected to increase fast in particular. On to of this, the Company is also looking to set up new earnings pillars from a long-term perspective by means of expanding market shares on the IT Systems for Clinics side as well as on the IT Systems for Long-Term Care/Welfare side.

On 12 October 2023, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 to Q2 FY02/2024 results. It has been revealed that the Company's gross profit margin is on the upswing. Owing to continued sharp rise in raw material prices, the Company was inevitably and consistently seeing a decline in gross profit margin for FY02/2022 and FY02/2023, but now the impact of passing on to unit selling prices appears to be starting to emerge. Combined with the curbing of SG&A expenses, the Company saw operating profit for Q1 to Q2 significantly increased over the same period of the previous year. Meanwhile, a concern is stagnated sales volume in Japan, the mainstay by region. During the relevant period, the auto production volume in Japan has increased significantly over the same period of the previous year and the Company did benefit from here, while having suffered from a weakness associated with applications other than autos, e.g., that of steels, etc., at the same time. We are to attend the results briefing via webcast (scheduled for 16 October 2023) and then interview the Company's management for further details so that we should be able to update our Company Report in light of the contents of both and release afresh.

TOW, planning and producing integrated promotions with strengths in the experience horizon, is keen on developing Online Promotions which has a high growth potential for the future. At the same time, the Company is also keen on steadily capturing the recovery in demand for projects of traditional Real-World Events. So far for FY06/2024, all those projects are resuming in earnest, leaving behind the negative impact of the Corona disaster, which has resulted in surging order backlog over the same period of the previous year for the Company as a whole. The Company has entered Online Events and Online Promotions since the early stage of the 2010s, while accumulating knowhow of planning and producing integrated promotions to be put together with Real-World Events. With respect to Online Promotions, the Company has been consistently and aggressively exploring and developing innovated domains. In other words, the Company is now in a good position to benefit from the recovery and expansion of demand stemming from revitalization of marketing activities contingent to that of socioeconomics and consumptions after the Corona disaster, taking advantage of its capability to provide an optimal solution to integrate real and online domains. Over the past four years (FY06/2020 to FY06/2023), the Company’s performance had been entangled and tossed about mainly by the Corona disaster, while the latest results in its proper position was seen for the actual results of FY06/2019 or just prior to the relevant period, i.e., sales of \16,278m, operating profit of \1,995m and operating profit margin of 12.3%, according to the Company. As far as we could see, the Company is now trying to get at performance beyond such levels as soon as possible, while planning to realize sustainable growth from a long-term perspective by means of steadily meeting increasing demand for integrated promotions.

MUGEN ESTATE, running operations of purchase and resale for secondhand real estate mainly in the Tokyo metropolitan area, has shown steady performance toward achieving its Second Midterm Management Plan (FY12/2022 to FY12/2024), announced on 14 February 2022, which is calling for CAGR of 16.2% in sales and 28.7% in earnings during the relevant period. For Q1 to Q2 FY12/2023, sales of residential real estate (mainly purchase and resale of secondhand condos on a unit-by-unit basis), on which the Company has been focusing, expanded rapidly, while sales of investment real estate (mainly purchase and resale of secondhand condos on a block-by-block basis) also increased sharply, having generated a substantial sales-increase effect for earnings. The latest FY12/2023 Company forecasts are said to be conservative for H2, but the forecasts are going for a full-year performance better than assumptions of the midterm management plan. As for trends in real estate for sale (inventory), the Company sees remaining value of residential real estate continuing to rise steady and thus a high level persisting for the Company as a whole. Meanwhile, the Company is seeing days for inventory turnover consistently declining, due partly to the firmness of real estate market with which it is confronted. Now, the Company is trying to further cut back on days for inventory turnover or raise inventory turnover with an objective of further pursuing efficiency.

DAIKEN MEDICAL, running operations to develop, manufacture and sell medical devices (some 85% being exposed to disposable products in terms of sales) mainly used for prevention of hospital-acquired infections and postoperative pain control, plans to achieve sustainable growth from a long-term perspective. The Company’s growth strategies comprise a) horizontal expansion in Japan, b) penetration into markets overseas and c) new entry into diabetes treatment using own key technology. Meanwhile, the Company has been calling for prospective sales of \11,000m and recurring profit of \1,800m for FY03/2027 as its performance target, since the announcement made on 24 December 2021, implying CAGR of 4.7% in sales and 14.3% in recurring profit, when setting the actual results of FY03/2023 as the point of origin. However, it appears that a contribution from the above-mentioned growth strategies has been hardly assumed. For example, with respect to b) penetration into markets overseas, the Company is to launch COOPDECH AMY PCA, a new product on the Infusion Pumps side in Europe, where it is currently in the process of receiving approval of MDR (Medical Device Regulation) to do so, while being still in the preparatory stage for establishing local sales channels. In other words, it is too early to assume a quantitative contribution from all those growth strategies at the moment, according to the Company.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, saw a recovery of gross profit margin for Q1 FY02/2024, while aiming to achieve a further recovery for Q2 and thereafter. The Company's gross profit margin has been on a continuous decline for the past two years due mainly to persistently higher raw material procurement costs, but now a major trend reversal is likely to take place as raw material procurement costs have begun to stabilize. Meanwhile, the Company suggests that sales volume is to increase for Q2 and thereafter, driven by a recovery in auto production volume. In Japan, the mainstay by region, the auto production volume has already shown a trend of recovery to date, but the Company says that its sales volume is rather stagnating as inventory adjustments have been occurring at auto parts manufacturers to which it directly supplies products. More importantly, however, once the effects of inventory adjustments have run their course, the Company says that its sales volume is to nicely increase. In Southeast / South Asia (Thailand, Indonesia and India), where the recovery in auto production volume is most pronounced, the Company has begun to see a short-term improvement in earnings with this as one of the reasons, having contributed to a recovery in the Company’s earnings. Also, in Japan, the mainstay by region, it appears that the same trend is likely to be seen.

On 18 August 2023, EM SYSTEMS, the leading provider of IT systems in charge of counter accounting and receipt billing for pharmacies in Japan, held its briefing on the web for the Q1 to Q2 FY12/2023 results. It has been revealed that system usage fee sales are beginning to expand. On the IT Systems for Pharmacies side, the mainstay, the Company saw system usage fee sales of \2,552m (up 17.7% YoY). One of the reasons cited for this is that the Company has been seeing an addon stemming from acquisition of a trade since the beginning of Q2. According to the Company, it will see a further addon from that of another trade for H2. At the same time, the Company notes that its share has risen up to 42.9% in the market for IT systems for pharmacies after the two deals, while intending to further enhance its share for the future. From a long-term perspective, the Company is to see an increasing contribution from its measures to horizontally apply its own knowhows in the domains of clinics and long-term care/welfare. In a respect that the Company holds a limited market share for each at the moment, i.e., 3.3% and 5.7%, respectively, it has a large room for the market shares to rise in the future.

On 10 August 2023, YAMABIKO, developing, manufacturing and selling outdoor power equipment (OPE) as the mainstay, released its Q1 to Q2 FY12/2023 results. It has been revealed that the Company was seeing immediate needs rather slowing in the start of spring, i.e., Q2 (April to June), when sales are supposed to concentrate due to seasonal factors, against the backdrop of unfavorable weather conditions in North America and other regions. The Company’s outdoor power equipment (OPE), mainly comprising trimmers, chain saws and power blowers, has a strong aspect to be used as operating machines for so-called lawn and garden care culture mainly in North America, while the local unfavorable weather conditions led to stagnated growth of the local plants and lawns, having resulted in a weakness of immediate needs for its products. More importantly, however, the Company is going for a favorable full-year performance for FY12/2023, as there was a major contribution to earnings for Q1 to Q2, stemming from sales nicely posted for inventory of products and components to be assembled, massively built up in a subsidiary based in North America towards the end of FY12/2022. By the way, the said short-term drastic changes in inventory levels were brought forth by the impact of Corona disaster and exchange rate fluctuations, being therefore nothing but a transitory phenomenon, according to the Company. For FY12/2024 and thereafter, the Company intends to achieve a stable and steady growth with its management plan.

On 4 August 2023, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its Q1 FY03/2024 results. It has been revealed that the Company's Condos Business (to develop condos for sale) has shown a significant increase in order intake. While sales for Q1 have remained roughly unchanged over the same period of the previous year as no condos were newly completed, order intake for condos scheduled to be completed for Q2 and beyond has begun to pick up in earnest. In addition to the contribution from properties already on the market, two new properties were put on the market for Q1, having contributed to the order intake. It appears that full-year sales on the Condos Business side are likely to increase fast as assumed in FY03/2024 Company forecasts. On the Housing Business side (to build housings on a contract basis), meanwhile, the Company has launched a new line of resilience-oriented detached housings called "Living with Peace of Mind Against Flooding,” based on its corporate concept of "eco & safety". The Company intends to proactively respond to the needs of society by introducing such new products to cope with the recently prevailing interest in safety and security due to the many natural disasters caused by extreme weather conditions.

On 4 August 2023, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its Q1 to Q2 FY12/2023 results. It has been revealed that a rapid recovery in sales is continuing. Given the fact that gross profit margin has remained at a high level, the Company is seeing a momentum even larger for earnings. Initial full-year Company forecasts has been already revised up (on 18 July 2023), while it appears that the current Company forecasts are based on conservative assumptions for H2. One of the reasons for the rapid recovery in sales is that the Company's efforts to expand sales of residential real estate (mainly purchase and resale of secondhand condos on a unit-by-unit basis), on which it has been focusing through the establishment of new sales offices, have begun to take effect in earnest. At the same time, sales of investment-oriented real estate (mainly purchase and resale of secondhand condos on a single building basis) have been rising steadily, also contributing significantly to the Company's sales. After the Corona disaster, demand for high-unit-price properties from overseas now appears to be particularly robust. We are to interview with management for details more in-depth to update our Company Report and release afresh: MUGEN ESTATE (3299) Growth Rate of 30% (13 April 2023).

On 31 July 2023, DAIKEN MEDICAL, running operations of development, manufacture and sale of medical devices mainly used for hospital infection prevention and/or anesthesia with an exposure of some 85% to disposable products, released its Q1 FY03/2024 results. It has been revealed that the Company is seeing a steady increase in sales and earnings. This is mainly attributable to firm sales of Suction Devices (FitFix, QinPot), the mainstay for the Company. The number of surgeries at major hospitals to which the Company delivers its products is on the rise, while successfully promoting sales to chronic-stage hospitals at the same time. Having had been forced to see a temporary loss for Q4 FY03/2023, it appears now that the Company is beginning to take hold for a new growth phase. In fact, as was advocated in the FY03/2023 results briefing, the Company is to a) make progress in horizontal expansion of strategic products in Japan, b) launch a new product AMY in overseas markets and c) enter the market for insulin pumps (diabetes treatment) by applying its key device (micropumps) for the sake of driving its long-term growth potential. By the way, we are to interview with the Company’s management on top of scrutinizing the information of the said result briefing in order to newly launch a full report on the Company, while planning to provide ongoing coverage of the Company.

On 12 July 2023, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 FY02/2024 results. It has revealed that higher selling prices are beginning to contribute to the Company's performance. For FY02/2023, the Company's gross profit margin was on a sustained decline due to soaring raw material prices, which was followed by a recovery for Q1 on a quarterly basis. Although sales volume has rather declined compared to the same period of the previous year, the Company has made a steady progress in passing on higher purchase prices as a result of raw material price hikes in the past to selling prices, while the rise in purchase prices due to soaring raw material prices has begun to cease. Still, with respect to the performance for Q1, it has to be considered that the Company posted sales of a large-sized project associated with wastewater treatment equipment to have contributed to earnings in Japan. We are to obtain further details through a web interview with the Company's management, so that we should be able to update MORESCO (5018) Improvement of Business Environment (5 June 2023) and release afresh.

Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, is to return to profitability at the operating level from FY03/2023 to FY03/2024. The main reason for this is that the Condos Business side (development of condos for sale) will see a significant increase in the number of buildings newly completed, which will lead to a significant increase in sales. Due to the uncertainty stemming from the Corona disaster, the Company had been holding off on acquiring land for condos for a period of time and the completion of new condos had been getting stacked up, which was followed by a restart for H2 FY03/2023 as a result of resumption of acquiring land for condos after the end of the relevant period, while this trend is to prevail on a full-fledged basis for FY03/2024. The Company saw only two buildings newly completed for FY03/2023, while going for no less than seven buildings to be newly completed for FY03/2024. By the way, FY03/2024 Company forecasts are going for prospective sales of \26,571m (up 93.1% YoY) on the Condos Business side. Meanwhile, on the Housing Business side (mainly building housings on a contract basis) , where a steady increase in sales has been substantially cutting back on operating loss, the Company is going for a further increase in sales and thus returning to profitability for FY03/2024. At the same time, the Company, advocating stable shareholder returns, plans to pay annual dividend of \25.00 per share, implying payout ratio of 39.6%, for FY03/2024, following \25.00 per share for FY03/2023.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, appears to formulate and disclose new midterm management plan (FY10/2024 to FY10/2026) in light of the fact that the performance target of the existing midterm management plan (FY10/2023 to FY10/2025) is now on track to be achieved ahead of schedule. For the first year, FY10/2023, the Q1 to Q2 results were better than initially expected and the Company achieved record sales and record earnings for the relevant period. The Company has implied that it plans to newly formulate and disclose performance target for FY10/2026 after assessing the full-year results. One of the reasons for the Company's strong performance for Q1 to Q2 was that it was able to capture increased demand from customers for FA cables or so-called private-sector-capex-related. While sales associated with semiconductor manufacturing equipment have remained buoyant, sales associated with automobiles and machine tools have been also favorable, according to the Company. For automobiles, the Company has seen a steady takeoff of sales associated with lithium-ion batteries for use in electric vehicles (EVs) and an outstanding strength in sales associated with factory automation and labor-saving measures in factories for machine tools. Meanwhile, sales have been also favorable for power cables or so-called construction-related as well as for non-cables on which the Company has been focusing for some time. By the way, the Company is now going for planned dividend of ¥100 per share for FY10/2023 versus ¥80 per share prior to the upgrade in response to performance better than expected, while suggesting a possibility to additionally buy back its own shares for H2 at the same time.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, is expected to achieve a significant recovery in earnings from FY02/2023 to FY02/2024 due to improvement of business environment. At the same time, the Company is developing measures to achieve sustainable growth for FY02/2025 and thereafter. In terms of profitability, it appears that the Company focuses on enhancing the level of ROE in particular. For FY02/2023, the Company's profitability deteriorated significantly due mainly to continued higher prices of raw materials it purchases and sluggish sales volume. Although the Company was making progress in passing on the higher prices of raw materials to selling prices, a certain time lag is always needed for this to be fully reflected in both sales and earnings, having resulted in consistently declining gross profit margin for FY02/2023. However, as raw material prices have begun to stabilize most recently, the impact of the time lag mentioned above has begun to diminish, suggesting that the gross profit margin is now beginning to show a trend of recovery. Meanwhile, the Company is going for a steady increase in sales volume for FY02/2024. On the Functional Fluids side (mainly applied in autos), an increase in sales volume is expected to occur due to an ongoing increase in the production volume of autos. For example, the Company is looking to an opportunity to benefit from its measures to focus on so-called new energy vehicles, for which demand is picking up sharply. Further, the Company is looking to a contribution from the Hot Melt Adhesives side (mainly applied in hygiene materials) as a result of successful horizontal expansion of applications.

On 25 May 2023, KAGA ELECTRONICS, a major electronic components trading company, held its financial results briefing for FY03/2023. It has been revealed that FY03/2024 Company forecasts, which are based on conservative assumptions, are going for “declining sales and earnings”, but the Company has indicated a recovery of performance for FY03/2025. For FY03/2023, the Company's operating profit and recurring profit reached new highs for the fourth consecutive year, backed by a significant increase in sales volume on the mainstay Electronic Components side, having led to an increase by ¥100 from the previous year to ¥220 for annual dividend per share, which is another high in the history. Meanwhile, FY03/2024 Company forecasts, cautiously assume uncertainties in the business environment, such as concerns about economic recession and inventory adjustment at customers. Still, the Company, which is committed to proactive shareholder returns, is to maintain the level of its annual dividend compared to FY03/2023. On 11 May 2023, in light of recent trends, the Company raised its earnings target for the final year of its Midterm Management Plan 2024 (FY03/2023 to FY03/2025). Although the original sales target of \750,000m (\600,000m from organic growth and \150,000m from new M&As) has remained unchanged, the Company is now calling for target operating profit raised up to “¥30,000m or more” from ¥20,000m, while aiming to achieve stable ROE of “10% or more” versus 8.5% or more prior to this.

On 12 May 2023, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its FY03/2023 results. It has been revealed that it expects to return to profitability from FY03/2023 to FY03/2024. The main reason cited is a significant recovery in sales on the Condos Business side (operations to develop condos for sale), with the completion of seven new condos scheduled for FY03/2024, compared to only two for FY03/2023. As a result, the Company expects sales from newly completed condos to increase significantly. The Company had been forced to suspend the acquisition of land for condos for a certain period of time in the wake of the Corona disaster, resulting in no new condos being completed for Q1 to Q2 FY03/2023 and the Company had to concentrate to sell only completed inventory. However, for H2 in the sane year, new completions resumed (two buildings) and it is expected that new completions will keep on going in earnest for FY03/2024.We are to attend the Company’s results briefing, scheduled for Friday, 26 May, in order to gather information more in depth as well as interviewing with management afterwards so that we should be able to update Sanyo Homes (1420) Executive Summary - Housings for Rent (15 July 2022) and release afresh.

On 12 May 2023, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its Q1 FY12/2023 results. It has been revealed that sales are surging compared to the same period of the previous year, while earnings are remarkably improving. During the same period of the previous year, the Company had focused on purchasing properties, while it appears that the Company’s aggressive sales activities are currently resulting in accelerating sales. At the same time, the Company has been making steady progress in purchasing properties and the balance of real estate for sale (inventory) has been rising consistently. For earnings, it appears that the Company has been well benefiting from a high level of gross profit margin being persisting. Full-year Company forecasts assume prospective gross profit margin of 19.0% (down 3.9% points YoY), presumably in light of an uncertainty for future real estate market, while the Company saw gross profit margin of 23.3% for the actual results of Q1, which is unchanged compared to the same period of the previous year. At the same time, the Company is now advocating a penetration into western Japan for the sake of further enhancing sales, having opened its Osaka Sales Office on 12 May 2023, which is expected to serve as a bridgehead for development of local operations. By the way, FY12/2023 Company forecasts have remained unchanged, but planned annual dividend per share (as of the end of the year only), having upgraded from \24.00 to \32.00, implying payout ratio of 40.4%. The Company has stated that it will treat all shareholders fairly and will increase shareholder returns, having abolished its shareholder special benefit plan and raised its target dividend payout ratio from "30% or more" to "40% or more" at the same time.

On 12 May 2023, YAMABIKO, developing, manufacturing and selling outdoor power equipment (OPE) on a global basis as the mainstay, released its Q1 FY12/2023 results. It has revealed that the Company's operating profit doubled compared to the same period of the previous year. This was mainly driven by a significant improvement in earnings resulting from accelerated inventory reduction in a subsidiary based in the United States after having had been built up towards the end of FY12/2022, while it was also contributing that the Company benefited from effect on increased sales, even when excluding the impact of yen’s depreciation. On the Outdoor Power Equipment (OPE) side (trimmers, chain saws, power blowers, etc.), the Company suggests that sales on a local currency basis in the Americas, the mainstay by region, increased compared to the same period of the previous year. FY12/2023 Company forecasts assume a positive impact to earnings from reduced unrealized gain in line with the above-mentioned inventory reduction, suggesting a net increase of ¥6,600m in operating profit on a full-year basis. In reality, meanwhile, the impact was running ahead of initial schedule for Q1, having resulted in prospective earnings revised up for Q1 to Q2 Company forecasts. Still, full-year Company forecasts have remained unchanged due to ongoing uncertainty in the market environment. In the first place, meanwhile, such a major swing in short-term earnings is brought forth by one-off factors and the Company plans to achieve stable and steady growth in earnings from a long-term perspective.

On 11 May 2023, EM SYSTEMS, the leading provider of IT systems for dispensing pharmacies (counter accounting and receipt billing), released its Q1 FY12/2023 results. It has been revealed that the Company is seeing a favorable performance, rather better than assumed in Company forecasts. On the mainstay Pharmacies side, the Company saw steady increases in system usage fee sales (to be generated in line with the use of systems) in line with the increased number of customers, while initial sales (to be generated in line with delivery and installation of systems as well as provision of initial services, including those of online eligibility verification) have surged. With respect to IT systems for dispensing pharmacies (counter accounting and receipt billing), generating the bulk of system usage fee sales, replacement demand for hardware picked up sharply due to the terminations of extended support for out-of-date versions of Windows OS, while the Company made a rapid progress in delivery and installation of online eligibility verification systems for all those existing customers prior to being made compulsory to do so in principle from April 2023. While such developments appear to be transient phenomena, the Company is looking to emerging sales associated with introduction of electronic prescriptions for the future. More importantly, the Company’s midterm management plan places the utmost emphasis on its measures to expand the number of customers, with which it is trying to set up and enforce a solid platform to persistently generate system usage fee sales carrying a high marginal profit ratio.

MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, is implementing measures to continue growing from a long-term perspective, calling for CAGR of 30.5% in sales and 29.5% in earnings from FY12/2022 to FY12/2024. For the FY12/2022 results, the Company has seen a substantial improvement in gross profit margin as a result of focus on the profitability in light of the continued strengths in the real estate market, but sales have declined inevitably. Still, the Company was actively purchasing residential real estate for the sake of sales expansion in the near future and thus real estate for sale (inventory) has surged towards the end of the year. Meanwhile, the Company has aggressively hired new human resources, including those with immediate skills, who have been steadily deployed in sales offices, collectively 6 in the number, newly set up with an objective of enhancing capability to sell residential real estate. Consequently, sales of residential real estate are to surge as planned beforehand, while sales of investment-oriented real estate are running rather ahead, likely to result in performance for FY12/2023 marginally better than planned beforehand, according to the Company. By the way, it appears that the Company is to optimize the balance between profitability and sales expansion, considering the uncertainties in the real estate market. Meanwhile, the Company has cited that prospects for FY12/2024 have remained unchanged to date, but also that it will open a new sales office in Osaka this summer to aim at expansion on a geographical perspective.

On 11 April 2023, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its FY02/2023 results. It has been revealed that a steady improvement in earnings is to occur for FY02/2024. The key reason cited for this is that the impact of time lag required to have passed on surging raw material prices to selling prices is to be gradually eliminated. According to the Company, the impact of time lag has caused a significant deterioration in its earnings for FY02/2023. In fact, the Company did pass on surging raw material prices to selling prices, but it required a certain period of time lag for the latter to be implemented after the former had taken place. For FY02/2023, it has been almost persisting that further hike of raw material prices was taking place, when the Company did pass that of the past on to selling prices after a certain period of time lag, having resulted in an ever-declining gross profit margin. Nevertheless, the Company is now stating that raw material prices which had continued to rise have begun to stabilize most lately and it is in the process of continuously passing on the hike of raw material prices so far to selling prices. We are to view the Company’s results briefing on the web, scheduled to be held on 17 April 2023, which is to be followed by our interview with management, so that we should be able to update MORESCO (5018) A Path of Recovery (14 March 2023) and release afresh.

YAMABIKO, developing, manufacturing and selling outdoor power equipment (OPE) on a global basis as the mainstay, plans to achieve performance ever-increasing from a long-term perspective. In the market of North America, which is the largest for OPE, so-called lawn and garden care culture is well established and there is a need for operating machines to take care of with. The Company has a capability to develop the world’s most compact, lightweight and high-power engines which are the most suitable for handheld operating machines, i.e., trimmers, chain saws and power blowers. With this capability, the Company manufactures and sells those products, all high-quality as well as environmentally compliant, for the sake of meeting a need in the market for OPE, which is expected to enlarge from a long-term perspective. At the same time, the Company is also keen on so-called battery-powered products with motors as the source of power. For FY12/2023, the Company is going for sales to consumers to decline in North America, assuming stay-at-home demand in the wake of Corona disaster continues falling off, but for a strength in sales to professional users across the board, looking to successful launch of news products and sales promotions. Meanwhile, Midterm Management Plan 2025 is calling for prospective sales of ¥170,000m and ROE of 10.0% (versus 8.6% for FY12/2022) for FY12/2025, the final year of the plan. For FY12/2026 and thereafter, the Company is looking to an advent of contributions from new business domains associated with existing ones, currently in the process of creation, while calling for prospective sales of ¥250,000m for FY12/2030, which implies a CAGR of 6.1%, when taking the FY12/2022 results as the point of origin.

Restar Holdings, which is one of the major electronics trading houses, is going for a long-term growth by means of making progress for its operations as the Electronics Value Platformer to accommodate all manner of stakeholder needs. The Company has an aspect that it runs subsidiaries in charge of diverse operations as a holding company, while looking to a future benefit from synergy amongst all those operations, including the existing mainstay ones. By the way, the Company is keen on development of operations in Japan (some 60% of sales) as well as those of overseas (some 40%), mainly in Southeast Asia and China at the same time. Meanwhile, sales and earnings have surged for Q1 to Q3 FY03/2023 and full-year prospective operating profit, assumed in Company forecasts, has been almost achieved. On top of addons by yen’s depreciation, sales were buoyant particularly for merchandises associated with industrial equipment and in-car equipment, which is mentioned as the key drivers. Nevertheless, the Company suggests that the supply-demand situation for semiconductors has begun to show a mixed sentiment sector to sector and this has led to a situation that it suffers from its inventory accumulated. In our estimate, days for inventory turnover stood at 52 as of the beginning of the fiscal year versus 63 as of the end of Q3. Given this, the Company is taking a cautious stance with respect to trading for Q4 (January to March).

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, is to move onto a path of recovery in its performance. The Company has been seeing a major adjustment in earnings for FY02/2023 due mainly to soaring raw material prices from the beginning of the fiscal year, while implying a prospective recovery of earnings for FY02/2024. This is expected to realize in line with an improvement in business environment. The prices of naphtha domestically produced, which had been soaring in line with the soaring prices of crude oil (in US dollar terms) and yen’s depreciation, have now shown signs of stabilizing. Naphtha (crude gasoline) is the basic raw material for petrochemical products across the board and the price trend of naphtha domestically produced has a significant impact on the prices of raw materials the Company purchases. So far, the Company has been consistently implementing revision on selling prices of own products in response to the continuous price hikes of raw materials, but it requires a certain time lag for the former to be implemented after the latter in the first place, having resulted in a situation that the impact of the revision has not been sufficient enough for the Company to maintain its profitability. More importantly, however, the Company does suggest that the impact of the revision on selling prices of own products will be gradually enlarging from now on, going for prospective sales of \34,500m (up 13.1% YoY), operating profit of \1,400m (up 180.0% YoY) and operating profit margin of 4.1% (up 2.4% points) for FY02/2024.

On 14 February 2023, EM SYSTEMS, the leading provider of IT systems for dispensing pharmacies, released its FY12/2022 results. It has been revealed that the Company is on track to achieve steady growth through its focus on system usage fee sales from a long-term perspective. Most recently, it is suggested that the Company benefits from growing demand associated with project of online eligibility verification amongst the existing customers, which is to be followed by that of electronic prescriptions, driving short-term performance as a whole. Meanwhile, the Company has announced its key policy to promote sales of “MAPs for PHARMACY DX” with an active spending to do so for the sake of increasing the number of customers and thus further beefing up its share in the market. This is to ensure ever-increasing system usage fee sales (to be consistently gained in line with usage of systems by customers), i.e., a stable source of earnings over the long-term. Further, the Company is looking to a future benefit stemming from its measures to apply the expertise of building IT systems to support operations for dispensing pharmacies to related sectors, i.e., clinics and long-term care/welfare. At the moment, the Company has a rather limited market share for each, implying a huge upside for the future.

NIRAKU GC HOLDINGS, which mainly runs pachinko & pachislot halls in eastern Japan, is showing a trend of recovery for its performance. For FY03/2023, the Company is to see a steady increase in revenue and a steady improvement in earnings. The Company has resumed payment of dividend with ¥0.17 per share for H1 (versus nothing for the previous H1), which is expected to be followed by payment with a target of achieving payout ratio of 30% on a full-year basis. For the H1 actual results, the Company benefited from a factor that the impact of Corona disaster was beginning to run its course, having resulted in a strength for revenue. On top of the mainstay Pachinko & Pachislot Hall Operations, the Company also saw a major contribution from Amusement Arcade Operations in Southeast Asia. By the way, the Company saw operating profit increased sharply in terms of an apple-to-apple comparison, i.e., excluding the impact of booking gain on release of lease liabilities as much as ¥1,349m during the same period of the previous year, which was a factor to have had boosted operating profit then to a corresponding extent. Meanwhile, for H2, the Company is to invest in “smart pachislot”, which is expected to result in operating profit for H2 rather smaller than that of H1. According to the Company, it is indispensable to invest in such new gaming machines to pursue future increase in revenue. In the first place, the market for pachinko & pachislot halls is consistently shrinking, but the Company, drastically streamlining its operations of the halls than ever before, newly opened two halls through acquisitions of ones run by trades with all their furnishings for FY03/2022, while implying its intention to continue doing so for the future as well.

On 9 February 2023, Restar Holdings, which is one of the electronics trading conglomerates, released its Q1 to Q3 FY03/2023 results. It has been revealed that prospective full-year operating profit assumed in the latest FY03/2023 Company forecasts were effectively achieved. On top of benefiting from strengths on demand for merchandises mainly associated with industrial equipment and in-car equipment, the Company also sees a major positive impact of yen’s depreciation. As of the beginning of the fiscal year, the Company was going for exchange rate of ¥115 per US$ for FY03/2023 versus the actual results of ¥136 for Q1 to Q3. During the same period, the Company saw net increase in operating profit by ¥6,913m over the same period of the previous year, of which ¥4,000m or more is accounted for by the gap between the above-mentioned exchange rates, according to the Company. Meanwhile, the Company says that supply-demand situation for semiconductors has become mixed, implying that it all depends on which domain to refer to, while also saying that this has created an aspect of increased inventory. In terms of our estimates, days for inventory turnover stood at 63 as of the end of Q3 versus 52 as of the beginning of the fiscal year. This is one of the reasons why the Company currently shows a conservative prospect for Q4 (January to March). We are to interview with management for details more in depth, so that we could update Restar Holdings (3156) Accommodating All Needs (11 January 2023) and release afresh in light of the content.

On 14 February 2023, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its FY12/2022 results. It has been revealed that gross profit margin has recovered nicely and thus operating profit margin accordingly, although sales have declined as a result of the Company’s strategy to focus on profitability in its sales activities. Meanwhile, for FY12/2023, the Company is looking to a major strength in sales and earnings by means of optimizing the balance between focus on profitability and promotion of sales. The Company has come up with a policy to dedicate itself to purchase and resale of residential real estate (represented by condos owned by unit) and has actively made progress in purchasing with this domain as the mainstay. Consequently, real estate for sale (inventory) as of the end of FY12/2022 stood at ¥51,323m, up no less than ¥15,701m (44.1%) from the end of FY12/2021. Meanwhile, the Company has already set up a structure to promote sales, having newly opened collective 6 business offices specialized in purchase and resale of residential real estate (represented by condos owned by unit), where personnel newly acquired by active hiring, including those of immediate skills, are stationed. With respect to the Company’s second midterm management plan (FY12/2022 to FY12/2024), the performance target for FY12/2024, the final year of the plan, has been left unchanged. Meanwhile, the Company has revealed its plan to geographically penetrate into new domain by means of launching a new business office in Osaka this summer. We are to interview with management for details more in-depth to update our Company Report and release afresh: MUGEN ESTATE (3299) Reversal and Thrust (29 March 2022).

On 10 February 2023, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 to Q3 FY03/2023 results. It has been revealed that the Company is seeing performance in line with assumptions of Company forecasts. Given yen’s weakness, sales are increasing favorably in all the regions, but operating profit margin is inevitably under pressure due to increased cost rate as a result of soaring prices of raw materials and resources. In China, the Company says that it is seeing a deterioration in the profitability of exports at local subsidiaries, which is mentioned as another reason for increased cost rate. For FY03/2024, the impact of soaring prices of raw materials and resources remains just unpredictable, but the Company is trying to get at growth from a long-term perspective by means of implementing all those measures found in our Company Report below. In other words, it is simply unavoidable for the Company’s short-term performance to be affected by changes in the business environment, which does not mean that the Company is undergoing structural changes. With an idea like this, the Company has set the target for shareholder returns and announced a policy of focusing on returning earnings to shareholders more than before.

On 14 February 2023, Shinwa, which mainly manufactures and sells system scaffoldings, released its Q1 to Q3 FY03/2023 results. It has been revealed that FY03/2023 Company forecasts were revised down. The Company is heavily involved with outright sales of products manufactured to users, while there is a tendency in the construction industry, which it faces, that users are making a shift from purchasing to renting with respect to the procurement of system scaffoldings and other products as a result of soaring material prices. Further, the Company is taking seriously the inappropriate actions of its former employees, which were disclosed on 28 September, inevitably resulting in a weakness in revenue in response to its measures implemented to prevent recurrence and to rebuild its compliance system through a review of its internal structure. At the location where this incident has occurred, the Company is concentrating all of its resources on correcting the operations based on all those above-mentioned measures, implying effectively no resources allocated to sales activities. Consequently, the Company suggests that it has seen revenue lower than expected for Q3 (October to December). More importantly, however, the Company is now looking to a normalization of sales activities in the said location from the beginning of FY03/2024, because it has a prospect to benefit from correction of the operations at this stage.

On 3 February 2023, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its Q1 to Q3 FY03/2023 results. It has been revealed that the Company is to see a turnaround for Q4 and thereafter, having seen operating loss increased over the same period of the previous year in the actual results. On the Condos Business side (operations to develop condos for sale), the key earnings pillar for the Company as a whole, the Company says that it had to suspend the acquisition of land for condos for a certain period of time in the wake of the Corona disaster, having resulted in no new condos completed for Q1 to Q2 FY03/2023 and inevitably sold condos completed only. However, the Company’s resumption for the acquisition of land for condos after the said period has led to a new condo completed for Q3 and such a trend is to persist thereafter, according to the Company, i.e., one property having been newly completed for Q3 and another one scheduled to be completed for Q4 and 7 properties for FY03/2024. In light of the fact that the Company saw 7 properties newly completed for the actual results of FY03/2022, it appears that the Company will see a normalization on the Condos Business side for FY03/2024.

On 3 February 2023, SHOFU, developing, manufacturing and selling dental materials & equipment, released its Q1 to Q3 FY03/2023 results. It has been revealed that sales in the Middle East have started to pick up favorably as those of India having had done so since a bit earlier. Combined with this, sales overseas benefited from yen’s depreciation over the same period of the previous year, having achieved a high growth. Meanwhile, sales in Japan have increased steadily due mainly to strengths of CAD/CAM-related products, which are encouraging the digitization of dental care. For the Company as a while, sales increased by 13.0%, while sales overseas increased by 19.0% and sales in Japan by 6.5%. At the same time, sales overseas increased by 5.4% on a local currency basis. With respect to sales in North Americas and Europe, the Company suffers from one-off negative factors in each (as found in our Company Report below), but sales are buoyant in “Asia, Oceania, etc.” or a region defined by the Company. With respect to China, accounting for more than half of sales here, the Company suggests that it has secured an increase in sales despite the impact of Corona disaster. Meanwhile, the Company has been seeing favorable startup of sales in India where it has newly set up a local sales office. With respect to the Middle East, sales have started to pick up favorably after the Company’s measure to make a shift to strengthening of local sales capability from sales via its sales office based in Singapore.

PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, announced on 13 January 2023 that it has newly set the target for its shareholder return policy, i.e., “payout ratio of at least 30% and dividend on equity (DOE) ratio of at least 3%.” Consequently, the Company has revised up its planned dividend per share for FY03/2023 from \13.00 to \19.50. At the same time, the Company is looking to a long-term growth by leveraging its strengths as the leader in a niche market for special order products associated with parts of molds & dies. The Company’s midterm management plan (FY03/2023 to FY03/2025) is calling for CAGR of 8.3% in sales and 18.0% in operating profit as business objective. According to the Company, it has the largest market share for special order products associated with parts of molds & dies in Japan and China, although the market size is limited for each. Meanwhile, as they carry gross profit margin relatively far higher than that of the average of parts of molds & dies, the Company has revealed its intention to focus on beefing up sales of all those products. On top of this, the Company intends to respond to growing demand for automation and workforce saving at manufacturing sites by actively developing and expanding sales of “Special Order Products” Belonging to the FA Domain by applying its differentiating technology for special order products associated with parts of molds & dies. For FY03/2023, the first year of the midterm management plan, the Company is to suffer from sales and earnings worse than assumptions due to changes in management circumstances. More importantly, however, the Company is convinced with the fact that structural changes have not taken place, leaving the business objective of the midterm management plan unchanged.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, has achieved a significant increase in earnings for FY10/2022, having made record earnings far higher than the latest ones. More importantly, the Company is going for a further growth from a long-term perspective. With respect to FA cables related to so-called private sector capex, the Company’s key earnings pillar, demand associated with semiconductor production equipment is expanding faster than expected, while demand associated with automobiles and machine tools is recovering to an extent beyond expectations. Meanwhile, with respect to power cables and other allied merchandises, i.e., so-called construction-related, the Company sees a hike more than expected in copper prices, which are supposed to have a direct impact on selling prices of all those merchandises resulting in sales higher to a corresponding extent. At the end of the day, the Company has achieved the performance target for FY10/2024, the final year of the existing midterm management plan (FY10/2022 to FY10/2024) for FY10/2022, the first year of the plan, having formulated a new midterm management plan (FY10/2023 to FY10/2025) where the Company is calling for prospective sales of \125,000m and recurring profit of \8,500m for FY10/2025, the final year of the plan, implying CAGR of 3.2% for sales and 2.5% for earnings, when setting the FY10/2022 results as the point of origin. By the way, the Company says that it is actually targeting growth higher even in a short-term view.

On 13 January 2023, MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, released its Q1 to Q3 FY02/2023 results. It has been revealed that the Company is seeing a steady trend of recovery in earnings for “lubricant-related,” principally exposed to autos, but seeing delays in recovery elsewhere. More importantly, however, such mixed sentiment is likely to be gradually terminating, going forward, which is expected to make the Company return to growth. Since the beginning of FY02/2023, the Company has been suffering from a hike in purchasing prices of raw materials, driven by drastic yen’s depreciation and soaring oil prices. As far as “lubricant-related” is concerned, the Company has just started to well cope with this by means of implementing revision on selling prices, having led to a steady trend of recovery in earnings here. Nevertheless, the Company has failed to make progress so far as much as anticipated with respect to revision on selling prices elsewhere. We are to speak to management on the web for information more in depth, so that we should be able to update MORESCO (5018) Time Lag (8 December 2022) and release afresh.

Restar Holdings, which is one of the electronics trading conglomerates, sees short-term earnings surging, while planning to achieve long-term growth by making progress in developing its operations as “the Electronics Value Platformer” that accommodates all manner of stakeholder needs. For Q1 to Q2 FY03/2023, the Company benefited from yen’s depreciation, continued semiconductor-related special demand and addons from PALTEK CORPORATION consolidated as subsidiary since Q2 FY03/2022, having resulted in a substantial increase in earnings over the same period of the previous year. The Company suggests that assumptions of initial Company forecasts were far exceeded for the actual results, having revised up full-year Company forecasts to a large extent. Still, as far as we could see, assumptions for H2 have remained effectively unchanged as the upward revision has reflected the overshoot for Q1 to Q2 only. Meanwhile, the Company intends not to be wedded to sale of semiconductors and electronic components, which is the mainstay at the moment, while trying to enhance its exposure to electronic equipment and solutions in addition to sale of modules or purchased semiconductors, etc. assembled as units, so that the Company will be able to pursue added value greater than now. At the same time, the Company is promoting solutions to society’s problems, e.g., “carbon neutrality,” “food crisis / food loss” and “disaster resilience.”

Shinwa, which mainly manufactures and sells system scaffoldings, has announced that it is proactively working on initiatives to achieve the performance target of its midterm management plan (FY03/2022 to FY03/2026 / announced on 14 December 2021) at its online financial results briefing for Q1 to Q2 FY03/2023 (held on 1 December 2022). For example, the Company is steadily entering the market for skyscrapers on the Scaffolding Equipment side, mainly comprising system scaffoldings, while favorably cultivating new industry domains through collaboration with its alliance partners on the Logistics Equipment side. For short-term performance, the Company suffers from unexpectedly sharp rise in raw material prices, but there is an aspect that this is largely compensated for by the Company’s measures to make a revision on product selling prices, having resulted in the Company’s idea that it does not have to change the performance target of its midterm management plan at this point. In fact, the Company saw actual results for Q1 to Q2, slightly better than assumptions of initial Company forecasts (announced on 13 May 2022). By the way, the midterm management plan is calling for prospective revenue of \25,000m and operating profit of \3,500m for FY03/2026, the final year of the plan, implying CAGR of 12.5% for revenue and 13.6% for operating profit, when setting the actual results of FY03/2021 as the point of origin.

SHOFU, which develops, manufactures and sells dental materials & equipment in Japan and overseas, plans to enhance its profitability on a sustained basis by focusing on expanding sales overseas where it sees high gross profit margin. In the first place, the growth rate of the markets overseas is considered higher than that of Japan and there remains a great room to be developed by the Company for the future. Sales overseas almost all comprise dental materials self-developed and thus are suggested to carry gross profit margin far higher than those of Japan where the Company is involved with purchase and sale of equipment. In light of this, the Company has been implementing measures to enlarge its exposure to operations overseas for some time, which led to a situation that it saw sales overseas larger than those of Japan for the actual results of FY03/2022. Meanwhile, for FY03/2023, sales overseas have continued to grow steadily due partly to yen’s depreciation and the Company planning to further pursue increased sales overseas for the future. By the way, FY03/2023 Company forecasts assume gross profit margin of 60.0% (up 2.6% points YoY) and operating profit margin of 12.0% (up 0.5% points), record high for each, while the same also applies to the Company’s performance during the relevant period. The Company is going for a sustained growth in prospective sales by means of focusing on further sales promotions overseas, trying to achieve a target operating profit margin of 15.0% as soon as possible.

On 25 November 2022, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, held its financial results meeting for Q1 to Q2 FY03/2023. It has been revealed that the number of newly completed condos is on track to show a steady recovery for the future. For the actual results of Q1 to Q2, sales on the Condos Business side have plummeted over the same period of the previous year, due mainly to the lack of newly completed properties, having forced the Company as a whole to suffer from operating loss. However, three new properties are scheduled to be completed for H2 and there are indications for FY03/2024 that the Company plans to see the number of properties newly completed roughly as many as in the actual results of FY03/2022, i.e., 7 properties on a full year basis (four for Q1 to Q2 and three for H2). The Company had been holding off on purchasing land for condos for some time due to uncertainty about the future caused by the spread of COVID-19. As a result, the Company has been forced to see a certain period to suffer from the lack of properties newly completed as above discussed, but a series of completion of new properties will continue going forward as a result of the restart of purchasing land for condos after that, which is expected to bring forth a major recovery in earnings for the Company.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, has been forced to suffer from significantly reduced earnings due to the rise in raw material prices. More importantly, however, the Company is continuing its management efforts to achieve an early recovery in earnings by means of focusing on measures to reduce the impact of time lag required for the effect of revision on product selling prices to realize after the rise in raw material prices. The Company is confronted with a business environment characterized by trends in forex rates, crude oil prices and naphtha prices. According to the Company, the Dubai crude oil prices (in US dollars) hit the bottom for Q2 FY02/2021 and have been on a sustained upward trend for eight quarters by Q2 FY02/2023 and thus the domestic naphtha prices, which have been seeing an acceleration in the rise since the beginning of FY02/2023 against the backdrop of rapid depreciation of yen against US dollar. In fact, naphtha (crude gasoline) is a basic raw material for petrochemical products across the board and the trend of the prices appears to have a significant impact on the prices of raw materials purchased by the Company. For the period leading up to Q2 FY02/2023, the Company has been seen a consistent rise in the prices of raw materials, having resulted in a situation that it suffers from a further rise in the prices of raw material, when the effect of revision on product selling prices realizing after a certain time lag, i.e., a situation that cost rate is trending upward consistently. Nevertheless, FY02/2023 Company forecasts are currently going for a major improvement in earnings for H2 over the Q1 to Q2 results due mainly to a benefit stemming from the above-mentioned management efforts.

On 24 November 2022, KAGA ELECTRONICS, a major electronic components trading company, held its financial results briefing for H1 FY03/2023. It has been revealed that the Company is to announce revision for management target for FY03/2025 in addition to FY03/2024 Company forecasts, when releasing the FY03/2023 full-year actual results. For FY03/2023, the Company saw the actual results for Q1 better than assumptions of Company forecasts, which was followed by another overshoot for Q2, while the Company suggests that the momentum better than expected will continue into H2. Meanwhile, the Company is rather concerned about a possibility for earnings to be under pressure due to non-reappearance of spot sales and customers’ inventory adjustment for FY03/2024. Thus, the Company would like to first assess how the FY03/2023 actual results will turn out so that it will be able to announce revision of management target for FY03/2025 with an improved precision. It used to be the case that this was to be announced after having assessed the actual results of Q1 to Q2 FY03/2023. Meanwhile, the Company held its EMS Business Briefing on 30 March 2022. For Q1 to Q2 FY03/2023, the Company saw substantially increased sales and a high level of segment profit margin (7.6% / up 1.4% points YoY) for “EMS” by segment of midterm management plan, while suggesting a direction for the current level of segment profit margin to be able to persist. Thus, the Company is seeing strengths here as expected in the briefing material at that time.

On 8 November 2022, KAGA ELECTRONICS, a major trading company of electronic components, released its Q1 to Q2 FY03/2023 results. It has been revealed that the Company saw an ongoing overshoot for the actual results of Q2, proceeded by the Q1 results better than expected. For Q1 to Q2, the in-house target, i.e., an undisclosed assumptions of Company forecasts, after the Q1 results, were exceeded by no less than ¥4,861m (36.0%) for operating profit, which came in at ¥18,361m (up 121.2% YoY). It appears that a factor accounts for some 90% of the overshoot that sales volume is increasing faster than expected on the mainstay Electronic Components (components sales business and EMS business) driven by strengths in some domains represented by automobiles and industrial equipment combined with the impacts larger than expected for improvement of sales mix. On top of this, spot sales are also performing better than expected, while the Company is seeing SG&A expenses running ahead, rather offsetting the impact of trends firmer than expected with spot sales. Thus, the remaining 10% of the overshoot, just roughly speaking, is accounted for by the net impact stemming from all those two issues. According to the Company, SG&A expenses are running ahead due mainly to the implementation of its policy to share earnings better than expected with own personnel by means of increasing a bonus payout. By the way, does it intend to do so by means of increasing a dividend payout for shareholders.

On 14 November 2022, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its Q1 to Q3 FY12/2022 results. It has been revealed that the Company is seeing a soaring trend for its gross profit margin on a quarterly basis, having reached a record high of 25.2% since listing for Q3 (July to September). This is due to the success of the Company’s sales activities which have been focused on profitability. As a result, the Company’s recent trading has been generally in line with assumptions of Company forecasts for earnings, while having fallen short of expectations in sales. There is an aspect that sales of residential real estate (condos owned by segment, etc.) have failed to increase as much as expected due to the Company’s thorough emphasis on profitability and thus sales for the Company as a whole. In light of this, the Company has begun implementing measures to　optimize the balance between its emphasis on profitability and its focus on sales promotions on a full-fledged basis since Q3 and it is now expected that such measures will yield reasonable results for Q4. Meanwhile, the Company’s focus on purchasing residential real estate continues to show steady progress, with the balance of the Company’s real estate for sale (inventory) as of the end of Q3 at \49,932m, an increase of no less than \14,310m (40.2%) compared to the end of FY12/2021. The Company is actively hiring mid-career personnel to enhance sales of such inventory, while looking to sales promotions stemming from here also from a long-term perspective.

On 10 November 2022, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 to Q2 FY03/2023 results. It has been revealed that, by region, sales increased sharply in China over the same period of the previous year, while so did sales associated with Automobiles and Other by application. However, the Company has inevitably suffered from a correction of earnings in the short term, due to impacts even larger stemming from increased cost rate and increased SG&A expenses. The Company says that it sees cost rate increased due to soaring prices of raw materials and resources, while mentioning another factor that its subsidiaries based in China suffer from a deterioration in profitability given the appreciation of Chinese yuan at the same time. With respect to increased SG&A expenses, the Company says that this is attributable to its exposure to expenses to rise in line with increased sales and also because of the appreciation of Chinese yuan. Meanwhile, full-year Company forecasts, when taking into account the actual results for Q1 to Q2, consequently assume prospective operating profit to remain generally unchanged for H2 over the actual results of Q1 to Q2, i.e., sales to rise by 4.5%, operating profit to rise by 1.7% and operating profit margin to decline by 0.2% points. Still, it appears that the Company is now trying to achieve performance better by means of placing further emphasis on sales promotions as well as making efforts for soaring prices of raw materials and resources to be passed on to selling prices. We are to attend the Company’s result briefing, scheduled for 17 November, which will be followed by our interview with management. In light of the content of both, we are to update PUNCH INDUSTRY (6165) Focus on FA Domain (12 July 2022) and release afresh in due course.

On 10 November 2022, Restar Holdings, which is one of the major electronics trading companies, released its Q1 to Q2 FY03/2023 results. It has been revealed that sales and earnings are fairly buoyant driven by a huge demand for semiconductors and electronic components, mainly associated with industrial equipment and in-car equipment. The actual results of Q1 to Q2 were much better than initially expected, having led to a significant upgrade for full-year Company forecasts, even though it appears that assumptions for H2 have remained generally unchanged. Meanwhile, there is an aspect that the Company inevitably suffers from loss on its operations of power retailing due to surging procurement cost of power, while suffering from delays in procurement of merchandises due mainly to supply chain disruptions for the operations of sales and installation of electronic equipment as well as extra costs incurred on an occurrence of unexpected person-hours in some part of system delivery at the same time. For all those operations, the Company will inevitably fail to achieve performance as initially expected on a full-year basis, but it appears that earnings are to see a recovery for H2 over the actual results of Q1 to Q2. We are to take part in the Company’s financial results briefing, scheduled for Tuesday, 29 November, which will be followed by our interview with management, so that we should be able to update Restar Holdings (3156) Steadily Growing (5 October 2022) and release afresh in due course.

On 9 November 2022, UZABASE, leveraging own data, content and knowledge as core assets, released its Q3 FY12/2022 results. It has been revealed that the Company’s performance is rather below expectations due mainly to advertising revenue below expectations for NewsPicks. More importantly, it has been also revealed that the Company is now starting over for a long-term growth by means of going private with Carlyle as the partner. Carlyle has announced that it will conduct a tender offer to make the Company its wholly owned subsidiary, while the Company has expressed its support for the offer. At the same time, the Company has recommended that existing shareholders tender their shares held in the said tender offer at \1,500 per share. According to the Company, the delisting will enable the Company to invest in the enhancement of its economic intelligence over the long term ahead of schedule, while at the same time acquiring the expertise and operational capabilities to build a management system that combines entrepreneurship and business expansion. Further, Carlyle will be able to utilize the global management expertise and networks of its portfolio companies (such as Zoominfo and Dealogic), which is also cited as a reason for the delisting.

On 11 November 2022, Shinwa, which mainly manufactures and sells system scaffoldings, released its Q1 to Q2 FY03/2023 results. It has been revealed that the Company is making steady progress in its pursuit of profitability in line with its initial measures. The price of steels, the main raw materials for the Company's products as typified by system scaffoldings, has been on the rise, resulting in higher purchasing costs for the Company. However, selling price revision implemented in Q1 has become widespread in Q2 and it is reported that the higher purchasing costs have been largely offset by selling price revision for the period of Q1 to Q2. The Company's mainstay system scaffoldings, which belong to the Scaffolding Equipment side, are reportedly experiencing a touch weaker-than-expected shipment volume due mainly to selling price revision, but the impact of higher revenue on the Logistics Equipment side was more than compensating, having resulted in the Company’s performance for Q1 to Q2 slightly better than assumptions of Company forecasts. We are to attend the Company’s financial results briefing on the web, scheduled for Thursday, 1 December, which will be followed by our interview with management, so that we should be able to update Shinwa (3447) Breakthrough Business (13 July 2022) and release afresh in due course.

On 2 November 2022, SHOFU, developing, manufacturing and selling dental materials & equipment, released its Q1 to Q2 FY03/2023 results. It has been revealed that the Company renewed its record highs in sales and earnings for the period of Q1 to Q2, driven by successful market cultivation in ex-Japan Asia and yen’s depreciation. By region, sales in “Asia, Oceania, etc.” came in at ¥3,505m (up 33.3% YoY and/or up 17.9% on a local currency basis). With respect to China, accounting for a bit more than half of sales here, the Company saw no more than 3.3% for the rate of growth in sales on a local currency basis, while having see no less than 39.8%, collectively, for the equivalent in regions other than China in this category, i.e., India where the Company has recently set up a local stronghold, Singapore, South Korea and Taiwan. The Company suggests that there is an aspect that sales in India were temporarily boosted by one-off factor. Still, excluding an impact stemming from here, it appears that the Company has successfully made progress in market cultivation in all those said regions for Q1 to Q2. We are to take part in the Company’s financial results briefing, scheduled for Tuesday, 22 November, which will be followed by our interview with management, so that we should be able to update SHOFU (7979) Growth Investment (6 July 2022) and release afresh.

On 13 October 2022, MORESCO, running operations of R&D, manufacture and sale of chemicals used in diverse applications with autos as the mainstay, released its Q1 to Q2 FY02/2023 results. It has been revealed that the Company is now seeing a trend of approaching a turning point with its quarterly earnings for H2 as decline in gross profit margin due to the sharp rise in raw material prices is likely to come to a halt. For the actual results of Q1 to Q2, crude oil prices have risen significantly above assumptions of initial Company forecasts and the prices of raw materials have been forced to move in a similar manner, which seems to have forced a considerable shortfall for operating profit. The Company did benefit from the effect of revision on selling prices of own products, but a certain time lag is necessary in order to fully “pass on” the rise in raw material prices (unit procurement prices) to selling prices of own products, according to the Company. Meanwhile, for H2, the Company is going for the rise in raw material prices to steadily “pass on”, unless there is a further rise in crude oil prices. By the way, we are to view the Company’s results briefing on the web, scheduled to be held on 17 October 2022, which is to be followed by our interview with management, so that we should be able to update MORESCO (5018) In Transition (7 September 2022) and release afresh.

Restar Holdings, which is one of the major electronics trading companies, sees short-term earnings surging, while planning to see long-term earnings steadily growing. For the actual results of Q1 FY03/2023, the Company saw sales and earnings substantially increased over the same period of the previous year on the Semiconductors & Electronic Components side (74.7% of sales and 91.9% of segment profit) and thus the same manner for the Company as a whole. In sales of devices, such as semiconductors, electronic components, batteries and chemical materials, the Company continues to capture robust demand associated with in-car equipment and industrial equipment in particular, while “deals on special demand for semiconductors” persisting. Further, the Company also benefits from net add-ons in sales and operating profit stemming from consolidation of PALTEK CORPORATION as a subsidiary. Meanwhile, from a long-term perspective, the Company advocates to solve social issues around the world by electronics as The Electronics Value Platformer. For example, the Company is to enhance its operations as so-called regenerative energy provider for the sake of realizing carbon-neutrality (net zero carbon emission). In fact, the Company has an aspect of aggressively undertaking the task of setting up new facilities for own mega-solar power stations, resulting in consistent increase of total power generation. The Company is now in the process of formulating midterm management plan that includes specific performance target, while planning to disclose the content in the near future.

MORESCO, running operations of R&D, manufacture and sale for chemicals used in diverse domains with autos as the mainstay, is in transition for seeing a full-fledged impact of revision on selling prices of own products implemented in line with increased procurement cost. In response to the sharp rise in crude oil prices, the Company has continued to see an increase in procurement cost. Meanwhile, it appears that this issue is the key reason why gross profit margin has been under pressure for some time. The Company’s revision on selling prices of own products was triggered by increased procurement cost. However, it takes a while for the revision to come into effect in reality, while the Company has consistently suffered from increased procurement cost, resulting in a situation that the impact of the revision has been consistently smaller than that of the increased procurement cost. In terms of the actual results of Q1 (March to May) FY02/2023, the Company has seen a recovery in gross profit margin over the last quarter (December to February), implying a possibility that the impact of the revision is starting to exceed that of the increased procurement cost, but the Company says that the prospective trends continue to be unpredictable. Meanwhile, as far as looking to no further sharp rise in crude oil prices for the future, the Company is highly likely to see a favorable recovery in gross profit margin.

On 2 September 2022, SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, released its Q1 to Q3 FY10/2022 results. It has been revealed that full-year Company forecasts will be exceeded, while the Company is looking to sales and earnings to increase further for FY10/2023. The factors cited for the sharp increase in sales for Q1 to Q3 comprise “increased demand associated with semiconductor manufacturing equipment,” “a recovery in demand associated with autos and machine tools,” and “an increase in sales associated with construction and/or electrical facilities materials sales companies due to the rise in copper prices (by 23.0% over the same period of the previous year).” For earnings, it appears that the Company has favorably benefited from an effect on increased sales, given a restrained increase in SG&A expenses. Going forward, the Company suggests that firm demand for FA cables, driven mainly by “increased demand associated with semiconductor manufacturing equipment,” will be persisting for FY10/2023, while going for an increase in sales volume for merchandises associated with construction and/or electrical facilities materials sales companies at the same time. In light of a situation that the Company is likely to assume a prospective stability for copper prices at around the current levels, the impact of higher copper prices on sales is not to reappear, but the growth in sales will be sustainable due to higher sales volume, according to the Company.

NIRAKU GC HOLDINGS, which runs Pachinko & Pachislot Hall Operations in eastern Japan, has come out with a policy of raising market share. For FY03/2021, the Company suffered from a sharp decline in revenue due to the impact of Corona crisis and booking of a large impairment loss in line with withdrawals from unprofitable halls, etc., having had resulted in operating profit margin of minus 38.8%, down no less than 45.8% points from 7.0% for FY03/2020, when the impact of Corona crisis is considered not to have prevailed yet. Meanwhile, the Company has seen operating profit margin of 3.9% (up no less than 42.7% points YoY) for FY03/2022, when the impact of Corona crisis was somewhat loosened, with a recovery of revenue up to the level equating some 80% of FY03/2020, a reduced impairment loss and a drastic progress made in rationalization of hall operations. At the same time, the Company has resumed dividend payment in response to such a substantial improvement in earnings. More importantly, the Company has acquired two halls run by trades with all their furnishings toward the end of FY03/2022, which is expected to bring in an effect on increased revenue for FY03/2023, while further decrease in impairment loss is likely. Now, the Company is looking to an improvement in earnings, exceeding the impact of an effect on increased revenue, while planning to further increase the number of halls to operate through acquisitions with all their furnishings, etc. from a long-term perspective for the sake of raising market share, which is expected to be the key growth driver for the future.

On 10 August 2022, Restar Holdings, which is one of the largest electronics trading companies, released its Q1 FY03/2023 results. It has been revealed that the Company saw operating profit roughly tripled over the same period of the previous year due to surging earnings in the mainstay segment of Semiconductors & Electronic Components. Mainly selling devices comprising semiconductors, electronic components, batteries and chemical materials, the segment of Semiconductors & Electronic Components (74.4% of sales and 91.9% of segment profit) had an aspect that it saw net increase in sales and earnings in terms of changes over the same period of the previous year due to consolidation of PALTEK CORPORATION, while having benefited from ongoing strengths in demand for merchandises associated with automotive equipment and industrial equipment. On top of this, the Company also benefited from an occurrence and booking of sales for new semiconductor-related special demand project, carrying high gross profit margin, as it did for FY03/2022, having resulted in a major improvement in gross profit margin for the Company as a whole. Meanwhile, the Company saw sales and earnings substantially increased also in the segment of Procurement to provide supply chain management as services, driven by consistently firm demand from the mainstay customer of the Panasonic Group and increased addons stemming from the Company’s successful measure to horizontally develop new customers. We are to have an online interview with the Company, while planning to report more in-depth based on the content.

On 5 August 2022, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its Q1 to Q2 FY12/2022 results. It has been revealed that the Company is seeing a trend of acceleration for its purchase, mainly of residential real estate, i.e., condos owned by segment, etc. and that it will optimize the balance between its emphasis on profitability and its focus on sales promotions for H2 so that initial full-year Company forecasts will be met. For Q2 (April to June), the amount of purchase settled has expanded up to some ¥14,300m, including that of some ¥7,400m (record high) on residential real estate, having increased by 85.1% over Q1 (January to March) as a whole. Meanwhile, the Company saw a sharp rise in gross profit margin for Q1 to Q2 (January to June) as a result of thorough emphasis on profitability, but this has led to shortfall in sales in terms of comparison with assumptions of Company forecasts at the same time. Still, the Company suffered from shortfall rather smaller for earnings. For H2, on the other hand, the Company says that it will somewhat relax its emphasis on profitability with the aim of strengthening its focus on sales promotions even more than before. Consequently, the Company is looking to the maximization of sales and earnings in terms of absolute amount.

On 9 August 2022, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 FY03/2023 results. It has been revealed that prospective earnings for FY03/2023 are not to increase as much as expected by initial Company forecasts (announced on 13 May 2022) due to increased procurement cost given prices of raw materials and economic resources higher than expected. Nevertheless, the Company says that the prospects do not change that it will continue seeing increased sales and operating profit for FY03/2023 and renew record highs since listing for each as it did for FY03/2022. Yen’s depreciation (Chinese yuan’s appreciation) has made progress more than initially assumed, bringing in some addons to sales, but brining in an issue for manufacturing subsidiaries based in China to suffer from a worsening in profitability at the same time. Thus, yen’s depreciation will not generate positive impacts to earnings, according to the Company. Meanwhile, the Company is looking to a full-fledged effect from revision on selling price for its products in line with increased procurement cost for Q3 and thereafter, but it appears that the current full-year Company forecasts are going for an inevitable decline in gross profit margin for the Company as a whole for FY03/2023. Still, the Company, being keen on returning earnings to shareholders, says that it will pay annual dividend of ¥13.00 per share, implying payout ratio of 15.7%, for FY03/2023, as initially planned.

On 4 August 2022, UZABASE, leveraging own data, content and knowledge as core assets, released its Q2 FY12/2022 results. It has been revealed that the Company is now seeing a recovery of year-on-year sales growth rate for Q2 over Q1, i.e., sales in the actual results increased by 15% for Q2 versus 11% for Q1. On the SaaS Business side, the Company has been seeing sales growth rate as fast as almost 30% for some time, while the extent of the decline in sales on the NewsPicks Business side has shrunk. FY12/2022 Company forecasts are going for a decline in EBITDA margin. It appears this is due mainly to that the Company forecasts assume increased cost burden stemming from investment to ensure consistent growth rate of 30% from a long-term perspective. For example, for Q2, were TV commercials launched on a trial basis with the aim of future growth in revenue of paid subscriptions accounting for roughly half of sales on the NewsPicks Business side. The Company says that it will continue launching them for H2 for the sake of efficiently acquiring free subscriptions and then encouraging the said free subscriptions to become paid subscriptions.

On 10 August 2022, Shinwa, which mainly manufactures and sells system scaffoldings, released its Q1 FY03/2023 results. It has been revealed that revenue of system scaffoldings continued increasing over the same period of the previous year with respect to Scaffolding Equipment and that there was a conspicuous contribution from having acquired a new project with respect to Logistics Equipment. For Q1, does the Company say that it has booked revenue on order placement for a new project to supply material transport pallets for electric equipment. This project is of large scale in the first place and there is an aspect that revenue was rather concentrated more than expected in line with revenue booked ahead of schedule. As a consequence, the Company saw steadily increased sales and earnings combined with an improvement in operating profit margin. However, the Company suggests that a retroaction from here will be unavoidable for Q2 and thus full-year prospective performance has left unchanged. Meanwhile, the Company has revised selling prices as scheduled for its products in May 2022 in line with rising steel prices. This could be a negative factor for volume shipment of its products for the future, but the Company currently places the utmost emphasis upon profitability, keeping the heat on meeting FY03/2023 Company forecasts for earnings in particular.

On 29 July 2022, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its Q1 FY03/2023 results. It has been revealed that operating profit margin is ensured in spite of sluggish sales as assumed in full-year Company forecasts. On the Housing Business side in charge of operations to build housings on a contract basis, the Company saw increased sales and reduced losses due mainly to favorable sales of housings for rent (mainly, multi-unit apartment buildings). More importantly, Company forecasts are going for an acceleration of this trend for Q2 and thereafter. Meanwhile, on the Condos Business side in charge of operations to develop condos for sale, the Company saw a major decline in sales, having resulted in decreased sales as a whole for itself. For FY03/2023, as it has been disclosed since the beginning of the year, Company forecasts do assume that sales on the Condos Business side will decline on a full-year basis, which is attributable to a factor that the number of properties to be completed and/or launched will temporarily decline for FY03/2023, which is expected to result in decreased sales and earnings on the Condos Business side. Nevertheless, the Company suggests that it sees gross profit margin higher than a certain level and decreased earnings on the Condos Business side is to be more than compensated for by improved earnings on the Housing Business side. By the way, the Company, being keen on returning earnings to shareholders, will maintain a high level of payout ratio. FY03/2023 Company forecasts are going for prospective dividend of ¥25.00 per share (as of the end of the year), implying payout ratio of 79.1%.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, has renewed its record high sales for Q1 to Q2 FY10/2022, as it has steadily captured a recovery in demand related to so-called private-sector capex, while having benefited from increased sales stemming from soaring Copper Prices at the same time. Meanwhile, gross profit margin has been rather under pressure due to soaring Copper Prices, but record highs have been renewed also for earnings. As a result, recent trading is running far ahead of assumptions of midterm management plan and the Company currently suggests that it will decide to what extent to revise up performance target for FY10/2024, the final year of the plan, in light of the actual results of FY10/2022. With respect to FA cables responsible for demand related to so-called private-sector capex, which is the mainstay source of earnings, the Company is seeing a major upward trend. For the domain associated with semiconductors, it is also the case for the Company to be increasingly required to cope with tight supply-demand conditions, while a recovery of demand is beginning to spread to wider category for the domain associated with machine tools. Now, the Company intends to continue steadily capturing demand generated by all those developments. Meanwhile, for the domain associated with automobiles, the Company is now recognizing the direction of a large increase in capex related to electric vehicles, although inevitably suffering from a negative impact of reduced production volume due mainly to shortage of components at the moment. The Company says that it will focus on batteries and/or accumulators by application, i.e., literally associated with automobiles rather than electric vehicles themselves, given a factor that demand is firm for “original products” carrying particularly high added value with respect to all those applications.

On 4 August 2022, SHOFU, developing, manufacturing and selling dental materials & equipment, released its Q1 FY03/2023 results. It has been revealed that recent trading is running far ahead of assumptions of initial Company forecasts due to the success of its strategy of expanding sales overseas and yen’s weakness. According to the Company sales in China have maintained a high growth rate, while sales in India are now emerging and/or ramping up rapidly. FY03/2023 initial Company forecasts have already been revised up, but it appears that the extent of the upward revision roughly equates only to that of the overshoot in Q1. From the perspective of full-year operating profit, we estimate some 80% of the extent of upward revision equates to the overshoot in Q1. With respect to the remaining 20% or so, it appears to have a lot to do with change of full-year assumptions for forex rate towards yen’s depreciation. On the other hand, the Company says that it is rather worried about a case that distributors overseas to which it directly supplies own products are building up inventory in preparation for potentially upcoming advent of accelerated inflation as well as some other cases, implying that the latest Company forecasts are again too conservative based on such assumptions.

Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, is to make a move from decreased earnings to increased earnings for FY03/2023 over FY03/2022. It is assumed that the operations to build housings on a contract basis run on the Housing Business side will return to profitability with FY03/2023 Company forecasts, which is the key contributor. Order intake on the Housing Business side has been nicely picking up as the Company is steadily capturing a recovery in demand for housings for rent (mainly, multi-unit apartment buildings), which is expected to result in consistent increase in sales stemming from here for FY03/2023. For housings for rent, the Company basically runs operations to construct multi-unit apartment buildings on a contract basis with landowners as clients, who need to make effective use of the lands they own. There had been a phase of correction when landowners or clients withheld investing because of uncertainties accompanying the spread of COVID-19, but the Company perceives that a phase of recovery has prevailed for FY03/2022, having had already gone out of a phase of correction. Meanwhile, on the Condos Business side in charge of developing condos for sale, it is inevitable that decreased sales and decreased earnings are to persist for FY03/2023 over FY03/2022, according to the Company. Sales of properties newly completed were sluggish for FY03/2022, which is to be followed by a period of temporary slowdown in the number of properties to be newly completed for FY03/2023. However, the Company says that the most recent state of procurement for lands to build condos suggests that sales on the Condos Business side will recover for FY03/2024.

On 13 July 2022, MORESCO, running operations of R&D, manufacture and sale for chemicals used in diverse domains with autos as the mainstay, released its Q1 FY02/2023 results. It has been revealed that the Company benefits from revision on selling prices of own products as assumed in Company forecasts and thus the Q1 results are also in line, generally speaking. As far as crude oil prices and/or naphtha prices are not to rise further, the Company suggests a tendency to persist for gross profit margin to rise for Q2 and thereafter in line with its measures and policies of passing on to selling prices. Meanwhile, the Company saw volume of products sold roughly unchanged for Q1 over the same period of the previous year, which is attributable to a factor that demand associated with autos, the mainstay by domain, has declined in Japan, the mainstay by region, in line with decreased production volume in Japan, albeit one-off, according to the Company. Meanwhile, having made progress for revision on selling prices of own products, the Company saw increased sales to a corresponding extent. Nevertheless, it was not enough to fully compensate for steep rise of raw material prices for Q1, having resulted in decreased earnings for the Company as a whole. Going forward, the Company is looking to improved impact of revision on selling prices of own products to appear after a time lag, resulting in increased sales and earnings on a full-year basis, as far as the above-mentioned condition is satisfied. We are to have an online interview with management, while planning to update MORESCO (5018) Recovery of Autos (1 June 2022) to release afresh in light of the content of the interview.

Shinwa, which mainly manufactures and sells system scaffoldings, appears continuing to see performance in line with the assumptions of midterm management plan (FY03/2022 to FY03/2026). Over the said period, the Company is to put growth investment of cumulative ¥10,000m in execution, which is expected to realize CAGR of 12.5% for revenue and 13.6% for operating profit. For FY03/2022, the first year of the plan, the Company was steadily capturing a recovery in demand from the construction industry, mainly that of private sector, having had gone through the impact of coronavirus crisis. As a result, the Company saw substantially increased revenue, including that of the mainstay system scaffoldings. Meanwhile, the Company has succeeded in coping with unexpected hike of steel prices with its measures to flexibly revise selling prices of own products, resulting in a stability for gross profit margin. With respect to assumptions of midterm management plan, the Company is looking to a stable growth for existing business, represented by system scaffoldings, while capability to pursue a high growth potential for breakthrough business at the same time. Enforcing operations to cultivate the market for scaffoldings in South China (Huanan) where the market size is estimated at no less than some ¥50,000m, while the Company is also keen on consistently boosting market share for multistory scaffoldings for it to have just entered into the market. Further, the plan also assumes benefits from M&As to create synergy with existing business and expansion of rental operations as well.

PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, has renewed its record high earnings since the listing for FY03/2022, while planning to see sustainable growth from a long-term perspective for the future at the same time. The Company, steadily capturing a recovery in demand following coronavirus crisis, has seen a favorable recovery of sales in the mainstay regions, i.e., China and Japan, while the same applies to Southeast Asia and Europe, Americas, etc. For China, sales have enlarged more than the levels prior to coronavirus crisis, which generated a major effect on increased sales, having substantially contributed to the renewal of record high earnings since the listing. Still, FY03/2023 Company forecasts assume a deceleration in the rate of growth for sales in China as well as a negative impact to earnings in local subsidiaries stemming from appreciation of Chinese yuan. Meanwhile, the Company’s midterm management plan Value Creation 2024 (FY03/2023 to FY03/2025) aims to promote efficiency in mass production of parts of molds & dies with capital investment of collective ¥5,000m during the period. On top of this, the Company says that it “incorporates demand associated with automation and labor-saving as new engine of growth.” In other words, it has been revealed that the Company now has a policy to focus on products belonging to the factory automation (FA) domain, including “special order products.” The Company, considering all those issues, is calling for CAGR of 8.3% for sales and 18.0% for operating profit during the period of the plan on a quantitative basis and even faster growth from a qualitative aspect.

SHOFU, developing, manufacturing and selling dental materials & equipment, is planning to see sustainable growth from a long-term perspective, calling for prospective sales of ¥31,509m and operating profit of ¥3,791m for FY03/2024 as performance target of midterm management plan, which implies CAGR of 5.8% for sales and 8.6% for operating profit when setting the FY03/2022 result as the point of origin. However, the Company will be forced to temporarily suffer from an adjustment in earnings for FY03/2023 due mainly to active growth investment to ensure long-term growth. The Company is looking to an ongoing expansion in the scale of its business accompanying consistent development in the market overseas as the key driver for prospective growth. In recent trading, the Company has been steadily capturing a recovery in real demand after the Corona crisis as well as having done so for demand generated by so-called normalization of distribution inventory, which realized a substantial increase in sales overseas. In the first place, the Company says that the market overseas is far superior in terms of growth potential for the future to that of Japan to have been matured. On top of this, there remains a room for the Company to cultivate far more in the market overseas than in that of Japan. Now, the Company focuses own management resources on pursuing the room overseas, trying to achieve performance target of its long-term basic policy, i.e., sales of ¥50,000m and operating profit of ¥7,500m as soon as possible.

On 26 May 2022, KAGA ELECTRONICS, a major trading company of electronic components, held its on-line results briefing for FY03/2022. It has been revealed that record-high earnings continue to be renewed. While record-high sales were renewed due mainly to firm sales in the mainstay segment of Electronic Components, record highs were renewed in operating profit and recurring profit for the third consecutive year and profit attributable to owners of parent for the second consecutive year. On top of having steadily captured a recovery in demand accompanying a recovery in manufacturing activities in Japan and overseas, the Company says that it saw a contribution as much as ¥4,100m at the operating level stemming from “spot sales”. Nevertheless, FY03/2023 Company forecasts assume that this will be no more than ¥1,000m. Meanwhile, the Company suggests that it will revise performance target of Midterm Management Plan 2024 in light of the actual performance for Q1 to Q2 FY03/2023. It appears that FY03/2023 Company forecasts are based on a conservative assumption, given uncertainty associated with prospective contribution from “spot sales” at the moment, while the Company suggests that it will be able to confirm a certain direction at this stage, seemingly planning to consider the extent of upgrade in performance target for FY03/2025, the final year of the plan, whose results are supposed to be timely disclosed. Meanwhile, the latest IR materials have been uploaded at the section of Earnings Presentations with the Company website.

MORESCO, running operations of R&D, manufacture and sale for chemicals used in diverse domains with autos as the mainstay, is targeting steady increase in sales and earnings from a long-term perspective. In FY02/2022, sales and operating profit for the Company as a whole have shown V-shaped recovery. This is because the Company is steadily capturing a recovery in demand for products belonging to the key division of functional fluids mainly exposed to autos, while benefiting from ongoing sales mix improvement and progressing revision of product sales prices due to the sharp rise in raw material prices at the same time. By region, the Company has seen a significant contribution from Japan in particular. Meanwhile, the Company’s midterm management plan (FY02/2022 to FY02/2024) is calling for prospective sales of ¥32,500m and operating profit of ¥2,300m for FY02/2024, the final year of the plan. In other words, the Company is aiming to achieve CAGR of 9.1% for sales and 26.6% for earnings, when setting the FY02/2022 results as the point of origin, during the two-year period toward FY02/2024. Most recently, crude oils prices are still soaring and thus raw material prices, but it appears that this will be passed on to product sales prices after a certain time lag. The other thing is the Company reveals its policy to thoroughly pursue the principles of sustainability, assuming even an implementation of business restructuring, under its revised management vision, for the sake of “realizing a sustainable society.” Further, the Company is also looking to “improvement of corporate value from a long-term perspective” by means of achieving the above-mentioned performance target of the midterm management plan.

On 13 May 2022, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, has released its FY03/2022 results. It has been revealed that the Company is going for becoming profitable on the Housing Business side for FY03/2023. Order intake has been firm driven by strengths of rental/welfare housings and thus buildup of order backlog. Going forward, this is expected to be followed by booking of sales stemming from here and increased sales on the Housing Business side as a whole. At the same time, on the back of effect on increased sales, the Company is looking to a major improvement for segment profit. For rental/welfare housings (rental apartments, etc.), there used to be a time for a while, when landowners refrained from making new investments due to the uncertainty associated with the spread of COVID-19, but new investments have been revived for FY03/2022 and this appears to be directly linked to increased order intake on the Housing Business side. Elsewhere, in February 2022, the Company was recognized by the Minister of the Environment as "Eco-First Company", i.e., environmentally advanced company in the housing industry. Following this, in March 2022, the Company's detached housings received "Excellence Award" in the House of the Year in Energy 2021, which is a scheme to award outstanding energy-saving housings. We are to attend the Company’s results briefing, scheduled for Monday, 30 May, in order to gather information more in depth as well as interviewing with management afterwards so that we should be able to update Sanyo Homes (1420) Passive to Proactive (14 July 2021) and release afresh.

On 13 May 2022, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, released its Q1 FY12/2022 results. It has been revealed that it is favorably purchasing as expected, while having suffered from delayed payment of a couple of fairly-large-scale projects on the investment-oriented real estate side at the same time. Consequently, the Company has suffered from a major decline in sales for Q1 over the same period of the previous year. However, the Company is currently going for prospective sales as expected for Q1 to Q2 with a conviction that the payment will be done by the end of Q2 at the latest. The Company saw purchase amount worth no less than some ¥5,900m for Q1, having resulted in real estate for sale (inventory) up to ¥39,387m, which is an increase by ¥3,766m (10.6%) from the end of Q4 FY12/2021 or over the past three months. On top of this, the Company says that it is almost fixed to be further purchasing as much as worth some ¥7,800m in light of the most recent contracts, etc. Here, the Company focuses on purchasing resident-oriented real estate (sectional-ownership condos, etc.). In terms of the Q1 results, this has accounted for almost half of the net increase of above-mentioned real estate for sale (inventory). In fact, the Company claims that it will remain focusing on this, looking to a long-term growth as much as nicely contributing to performance for itself as a whole. By the way, the Company suggests that recent hike in material prices has been well passed on to selling prices as the market for real estate is still performing firmly.

On 13 May 2022, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its FY03/2022 results. It has been revealed that the Company saw the highest earnings since listing. It appears that this is due mainly to an aspect that it is steadily capturing a recovery in demand, presumably together with an increased share in some part of the market. Meanwhile, the Company’s midterm management plan Value Creation 2024 (FY03/2023 to FY03/2025) is calling for sustainable long-term growth with a stability by means of implementing growth investment as much as collective ¥5,000m during the said period. The Company says that it has set “demand for automation and/or labor saving” in the manufacturing as a new growth driver, while going for the goal of consistently being “the first choice for customers”, i.e., “the form of the Company as it should be”, having raised priority business challenges, comprising “expansion of both new and existing operations”, “enhancement of production system” and “strengthening of research & development” at the same time. For the hard-hitting measure of operation foundations to support own efforts to undertake all those challenges, the Company says that it will focus on “DX promotion,” “financial strategy” and “sustainability.” We are to attend online briefing, scheduled for 27 May 2022, which is to be followed by our interview with management. In light of the contents of both, we are to update PUNCH INDUSTRY (6165) Growth Investment (20 January 2022) and release afresh.

On 13 May 2022, UZABASE, using Business Intelligence as the core assets, released its Q1 FY12/2022 results. It has been revealed that FY12/2022 Company forecasts are going for sales growth rate of as much as 27% with the upper end of the suggested rangeｓ in terms of changes after retroactive adjustment for changes of accounting standards. In other words, the Company is to almost achieve its long-term target of seeing CAGR of 30% for sales, when the upper end forecasts are met. However, sales have increased by no more than 11% for Q1 FY12/2022. Sales on the SaaS Business side have increased by no less than 26%, but sales on the NewsPicks Business side have declined by 11% or having come down over the same period of the previous year. This is due to declining sales of advertising and publishing operations on top of the impacts stemming from having pulled out of NewsPicks Ginza. Still, the mainstay operations of billing retail paid subscribers of NewsPicks saw ARR edged up. More importantly, the Company has started up implementing large-scale marketing investment for Q2 (April to June), represented by running TV commercial, with an objective of enhancing the acquisitions of non-paid subscribers. It will take a while for this to eventually lead to enhancement of the acquisitions of paid subscribers and thus ARR, which is anyhow expected to result in a recovery on the NewsPicks Business side as a whole at the end of the day.

On 11 May 2022, Restar Holdings, which is one of the major electronics trading companies and is developing own business as The Electronics Value Platformer, released its FY03/2022 results. It has been revealed that the Company is in the direction of continuing to increase sales and earnings. For the mainstay Semiconductors & Electronic Components (72.1% of sales and 85.3% of segment profit in FY03/2022) where it mainly sells devices represented by semiconductors, electronic components, batteries, chemical materials as well as running operations of EMS, the Company forecasts assume sales associated with special emergency demand projects carrying high margin accompanying semiconductor shortages are not to reappear, but looking to a major improvement in earnings for FY03/2023 from Electronic Equipment where it mainly sells broadcasting/video-related equipment as well as system equipment. At the same time, the Company is also looking to a contribution to own earnings from Environmental Energy where the main operations are of renewable energy generation to propel decarbonization, while other operations in this segment are of “power producer and supplier (PPS)” and vegetable factory. Elsewhere, the Company forecasts assume an inevitable adjustment in earnings for Procurement where it takes on supply chain management on behalf of customers represented by Panasonic Group. The Company has benefited from add-on earnings due to yen’s depreciation for FY03/2022, which is not assumed to reappear at the moment, while it is assumed that the Company will suffer from non-reappearance of sales associated with special emergency demand projects carrying high margin accompanying semiconductor shortages also in this segment. We are to attend upcoming online results briefing scheduled for Tuesday, 31 May 2022, which is to be followed by our interview with management. In light of information from both, we are planning to launch our first Company Report in Japanese and English.

On 13 May 2022, Shinwa, which mainly manufactures and sells system scaffoldings, released its FY03/2022 results. It has been revealed that performance is in line with assumptions of midterm management plan. With respect to the mainstay system scaffoldings, the Company is seeing a strength in revenue in spite of sluggishness of total amount of contraction investments in Japan, which is attributable to its successful efforts to steadily capture demand associated with private sector in particular. More importantly, this trend is likely to be persisting going forward, according to the Company. Meanwhile, the Company has been seeing surging procurement prices for steels to be adopted as the key materials in system scaffoldings and other products, which is far higher than assumptions of midterm management plan. However, the Company suggests that this impact will be eliminated by consistent and flexible revision on selling prices at least from a midterm perspective. In other words, it could be the case that short-term gross profit margin may be unavoidably under pressure as a result of further hike in prices of steels, but it appears that this is not structural in a respect that the rise of procurement prices will be passed on to selling prices after a certain time lag at the end of the day. We are to attend upcoming results briefing on the web scheduled for Friday, 27 May 2022, which is to be followed by our interview with management. In light of information of both, we are to update Shinwa (3447) Investment and Growth (28 January 2022) and release afresh.

On 11 May 2022, SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, released its FY03/2022 results. It has been revealed that sales and earnings are running far ahead of assumptions of midterm management plan due to surging sales overseas. For Q1 (April to June) FY03/2021, sales overseas declined sharply given the impacts stemming from COVID-19, while the Company has been steadily capturing a recovery in actual demand since the bottom at that time. On top of this, this trend is also true of subsequent increase in demand accompanying the move to optimize distribution inventories, having resulted in upward revision for the performance target of midterm management plan (FY03/2022 to FY03/2024), currently calling for prospective sales of ¥31,509m and operating profit of ¥3,791m for FY03/2024, the final year of the plan, while implying CAGR of 8.5% for sales and 18.1% for operating profit with the FY03/2021 results as the point of origin. Meanwhile, the Company expects a recoil reaction associated with subsequent increase in demand accompanying the move to optimize distribution inventories to appear for FY03/2023, while planning to aggressively increase spending on investment to drive own long-term growth potential at the same time. We are to take part in the Company’s financial results briefing on the web, scheduled for Thursday, 26 May, which will be followed by our interview with management, so that we should be able to update SHOFU (7979) Steadily Capturing (21 December 2021) and release afresh.

On 12 April 2022, MORESCO, running operations of R&D, manufacture and sale of chemicals used in diverse domains, mainly automobiles, hygiene products and IT-related equipment, released its FY02/2022 results. It has been revealed that the Company is seeing V-shaped recovery for sales and operating profit as a result of steadily capturing a recovery in demand for functional fluids, the mainstay by business division, as well as for other products. This trend is particularly pronounced for the operations in Japan, the mainstay by region, which appears to be assumed to be persisting in FY02/2023 Company forecasts. Meanwhile, most recently, the Company has been seeing a hike in unit purchase prices of raw materials in response to sharp rise in crude oil prices. Still, the Company suggests that this has been passed on to unit selling prices to more than a certain extent, going for a further continuation of V-shaped recovery for sales and operating profit in FY02/2023 Company forecasts. By the way, we are to view the Company’s results briefing on the web, scheduled to be held on 18 April 2022, which is to be followed by our interview with management. Based on the contents of both, we are planning to launch the first full report on the Company.

MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and the three surrounding prefectures, has begun implementing management measures aimed at reversal and thrust, calling for CAGR of 16.2% for sales and 28.7% for earnings towards FY12/2024 as performance target, setting the FY12/2021 results as the point of origin. The Company had suffered from consistently decreased sales and earnings through FY12/2018 to FY12/2021 due mainly to the impact of changes in the external environment, while it has begun to focus on residential real estate for some time to date as well as having set up operations to become new earnings sources at the same time. With respect to purchase amounts of properties or leading indicator of sales, the Company saw ¥17,300m (down 37.8% YoY) in FY12/2020, which was followed by ¥22,300m (up 28.9%) in FY12/2021, while currently going for ¥34,341m (up 54.0%) in FY12/2022. Thus, the Company here has already seen reversal in the actual results, which is to be followed by thrust, just literally, implying that the Company will steadily accumulate inventory to realize above-mentioned increase in prospective sales. For residential real estate whose purchase amounts of properties have been substantially raised with a prospect that so-called “real demand” will remain firm persistently, while the Company is also implementing measures to beef up capability of sales promotions, currently setting up new business offices to exclusively focus on enhancement of operations to purchase and resell residential real estate via local real estate brokers across the board for the Company’s respective business areas. The Company states that it is trying to become the largest in terms of the number of properties to purchase in the Tokyo metropolitan area by means of building sales network with comprehensive coverage in there.

On 14 February 2022, MUGEN ESTATE, running operations to purchase and resell secondhand real estate in Tokyo and three surrounding prefectures, released its FY12/2021 results. It has been revealed that the Company renews its corporate philosophy and newly sets mission of "Creating new value in real estate and taking on challenges to enrich the lives of all, making their dreams come true", while calling for a long-term growth as found in the second midterm management plan (FY12/2022 to FY12/2024) just formulated and announced, i.e., sales of ¥53,224m, operating profit of ¥4,991m and operating profit margin of 9.4% for FY12/2024, the final year of the plan. When setting the FY12/2021 results as the point of origin, this performance target suggests CAGR of 16.2% for prospective sales and 28.7% for operating profit, while operating profit margin to rise by 2.5% point during the period. While the Company had been taking a conservative stance towards purchasing properties by FY12/2021, it has recently begun to actively purchase mainly residential properties, currently going for purchase collectively equating ¥34,300m (up 53.8% YoY) for FY12/2022. It appears that such turnaround will be feeding through to performance for the Company as a whole. By the way, we are to interview with management so that we should be able to newly launch our Company Report in light of the content.

On 10 February 2022, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 to Q3 FY03/2022 results. It has been revealed that the Company is seeing performance better than assumptions of Company forecasts (announced on 10 December 2021). In response to this, FY03/2022 Company forecasts have been revised up, while yearend dividend per share from ¥4.00 to ¥9.00, leading to ¥13.00 on a full-year basis, implying payout ratio of 15.9%. More importantly, the Company, which is actively working to return earnings to shareholders, intends to raise payout ratio up to 20% or more as soon as possible. As the impacts of Corona crisis have run their course, demand for parts of molds & dies manufactured and sold by the Company has been recovering across all regions and applications, resulting in an ongoing recovery in sales for the Company as a whole. In terms of the period of Q1 to Q3, the Company has renewed its record highs since listing in earnings across the board. This is partly driven by depreciation charges reduced by impairment in the past years, but the Company is to renew its record highs since listing for full-year earnings too, bringing in ROE of 12.9% (up 8.9% points YoY) for FY03/2022, which is another renewal of record high since listing. By the way, the Company is planning to release its new midterm management plan (to start with FY03/2023) towards the end of May 2022, in which specific measures for further growth and long-term performance target are to be mentioned.

On 4 February 2022, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, released its Q1 to Q3 FY03/2022 results. It has been revealed that sales and earnings improved substantially over the same period of the previous year, having performed roughly in line with assumptions of Company forecasts (announced on 5 November 2021). Sales are running rather behind, but it is more than compensated for by the impacts of SG&A expenses control more progressed than assumed, resulting in earnings marginally larger, according to the Company. More importantly, however, it appears that sales and earnings are to inevitably decline over the same period of the previous year for Q4 (January to March), when sales are concentrated every year, as assumed in Company forecasts. For the period of Q4 FY03/2021, which is that of the same of the previous year, the Condos Business side saw sales concentrated to an unprecedented extent with an improved exposure to properties carrying gross profit margin relatively higher. Compared with this, sales are to inevitably decline as well as gross profit margin on the Condos Business side for Q4 FY03/2022. Thus, the Company is to see earnings as a whole to decline for FY03/2022, but it ensures stability for divided, currently planning to pay dividend of ¥25.00 per share, implying payout ratio of 92.2%, also for FY03/2022, as advocated by its policy of proactively returning earnings to shareholders.

On 14 February 2022, Shinwa, which mainly manufactures and sells system scaffoldings, released its Q1 to Q3 FY03/2022 results. It has been revealed that the Company is seeing steady increase in sales and earnings, implying that favorable performance in line with assumptions of FY03/2022 Company forecasts is persisting. The Company says that demand for its mainstay system scaffoldings has continued to be firm as construction work, particularly of private-sector projects, is showing solid growth. Meanwhile, demand for high-value-added safety measures equipment aimed at enhancing the safety of construction sites has also continued to be robust in the same way. On top of this, the Company has booked its first revenue for multistory scaffoldings for Q3 (October to December). The Company, which is making a new entry into multistory scaffoldings used in high-rise architectures such as skyscraper condominiums, is planning to raise its revenue here significantly from a long-term perspective. At the same time, the Company saw operating profit margin of 15.0% (up 0.9% points YoY) for Q1 to Q3. Despite the impacts of soaring prices of steel, the main raw materials for the Company’s products represented by system scaffoldings, gross profit margin has maintained its previous level due to higher sales and the effects of revisions to selling prices. Meanwhile, the Company sees revenue to SG&A expenses ratio declining due to the success of cost-cutting and spending restraints, bringing forth improvement in operating profit margin to roughly a corresponding extent.

On 9 February 2022, UZABASE, using Business Intelligence as the core assets, released its FY12/2021 results. It has been revealed that FY12/2022 Company forecasts are going for increase by 30% for prospective sales at the upper end of suggested range, when excluding the impacts stemming from change in accounting standards and other factors. At the same time, the Company has reiterated that it is calling for prospective sales of ¥45,000m and EBITDA margin of 15.0% (versus 11.9% in FY12/2021 results) for FY12/2025, implying CAGR of some 30% (29.6%) for sales, when setting FY12/2021 results as the point of origin, and improvement in EBITDA margin by 3.1% during the same period. For FY12/2022, however, the Company will continue to aggressively implement growth investment, following on from FY12/2021, inevitably resulting in a here-today-gone-tomorrow adjustment in EBITDA margin. On the SaaS Business side, the Company is going for increase in expenses, principally that of newly hiring personnel to reinforce sales of SPEEDA EXPERT RESEARCH, FORCAS and AlphaDrive/NewsPicks, while that of marketing to increase the number of paid individual subscribers to be acquired on the NewsPicks Business side.

On 4 February 2022, SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, released its Q1 to Q3 FY03/2022 results. It has been revealed that sales and earnings are surging, driven by recovery in sales of the mainstay dental materials in Japan on top of ongoing rapid recovery in sales overseas, having resulted in renewal of record highs in sales and earnings across the board for the period of Q1 to Q3. For H2 (October 2021 to March 2022), there was a concern that sales overseas were to adjust, which has proven unfounded to date. That is to say, the Company was worried about an inevitable probability for reactionary decline in sales overseas to materialize for H2 after an episodic surge in demand due to so-called inventory buildup amongst local distributors, but it did not take place for Q3 (October to December) and the situations have not changed so far in Q4 (January to March), according to the Company. Meanwhile, the Company suggests that it has been successfully launching new products in Japan for a while. At the end of the day, the Company saw progress rate having reached almost 100% in the period of Q1 to Q3 against full-year Company forecasts (announced on 26 October 2021) in terms of earnings, partly because of delayed spending of SG&A expenses in some parts.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, has raised its performance target from a long-term perspective. The Company is now calling for CAGR of 4.3% for sales and 8.0% for recurring profit during a three-year period by FY10/2024, setting the FY10/2021 results as the point of origin. For FA cables or so-called private-sector-capex-related, which is the key earnings pillar for the Company as a whole, the Company is looking to increasing business opportunities driven by progress to be made in push of decarbonizing and technological innovations associated with AI, IoT and 5G. On the occasion of progress in push of decarbonizing, for example, the Company suggests that capital expenditure in electric vehicle production line (manufacturing robots) will be consistently enhanced, while that of manufacturing cutting-edge semiconductors in line with progress of technological innovations. More importantly, the Company also suggests that such capital expenditure requires lots of FA cables based on the Company’s expertise, which is the reason why they are so-called private-sector-capex-related in the first place. Meanwhile, on top of planning to increase dividend for the ninth consecutive year for FY10/2022, the Company has been continuously buying back own shares for a while and recently retired some for the first time. Thus, the Company’s policy to proactively return earnings to shareholders is now further accelerating, while being keen on ESG-based management and SDGs initiatives at the same time.

Shinwa, which mainly manufactures and sells system scaffoldings, has formulated its midterm management plan (FY03/2022 to FY03/2026) and disclosed the contents, calling for prospective revenue of ¥25,000m and operating profit of ¥3,500m for the final year of FY03/2026 as performance target. When setting the FY03/2021 results as the point of origin, the Company is calling for CAGR of 12.5% for revenue and 13.6% for operating profit. The Company is planning to implement cumulative investment as much as ¥10,000m during the said five-year period versus some ¥2,000m over the past four years for the sake of sustainable growth and enhancement of corporate value. The prospective investment comprises ¥5,000m in M&As to create synergies with the existing operations and the remaining ¥5,000m in the launch and reinforcement of rental business, ESG initiatives and the renewal & expansion of manufacturing facilities in Japan and overseas. Meanwhile, the Company, which adopts a proactive stance on shareholder returns, has reconfirmed its policy of maintaining payout ratio of 40% or more, while considering a further share buyback, depending on the capital position in the future, having actually done so in FY03/2022.

UZABASE, using Business Intelligence as the core assets, is to synergize SaaS and NewsPicks to a point of close fusion, looking to prospective sales enhancement for SaaS (products and services). The Company has come to a stage to advocate “awaken a world of play in business, with our insights” as Purpose, while calling for prospective sales of some ¥45,000m and EBTIDA margin of 15% as performance target for FY12/2025, implying CAGR of 30% for sales and improvement of EBITDA margin by 3.4% points, when setting FY12/2021 Company forecasts as the point of origin. According to the Company, not only does it invest in marketing but also synergizes SaaS and NewsPicks to a point of close fusion for the sake of enhancing sales of SaaS (products and services), which is expected to realize a situation where NewsPicks users become SaaS users another and yet another. In particular, the Company is looking to a major contribution for the growth coming from SPEEDA EXPERT RESEARCH、FORCAS and AlphaDrive/NewsPicks (AD/NP), implying that the Company is to invest mainly in products and services belonging to all those domains.

PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, has revealed its policy of aggressively implementing capital investment for the sake of long-term growth. With respect to the latest developments by region, sales in China have exceeded the level at the time before the Corona crisis, while a similar trend can be seen in Electronic Components & Semiconductors by application. For earnings, the Company has renewed its record high levels since its listing. More importantly, it appears that the Company is to go for further growth during the period of upcoming next midterm management plan Value Creation 2024 (FY03/2023 to FY03/2025), leaving the launch pad of above-mentioned situations. In light of ongoing expansion of IoT-based society, the Company is planning to steadily capture new demand generated by this with aggressive capital investment in “promotion of new technological developments” that leverage the Company’s strengths. Elsewhere, in addition to manufacturing and selling parts of molds & dies, the Company is planning to cultivate and expand its exposure to a servicing domain related to the existing operations. Further, the Company is planning to aggressively invest in promotion of DX (digital transformation) with an objective of raising own operational efficiency. At the moment, the Company is carefully examining the outline of the next midterm management plan, while the plan is scheduled to be announced towards the end of March 2022, including performance target, as long as no unforeseen circumstances take place.

SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, is seeing favorable performance. Having continuously focused on upgrading sales network and expanding product-supply system for own operations overseas, the Company is steadily capturing a recovery in demand overseas. In response to the impacts stemming from COVID-19, demand overseas had once plummeted temporarily, while the impacts have weakened even more than initially expected for Q1 to Q2 FY03/2022. On top of full-year Company forecasts for FY03/2022 having been upgraded in line with the results better than expected for Q1 to Q2, it appears that the Company has started to consider revising up Fourth Midterm Management Plan (FY03/2022 to FY03/2024). FY03/2022 Company forecasts (the same as assumptions of the first year in the midterm management plan) have been revised up by ¥1,605m (6.1%) in sales and ¥1,212m (67.4%) in operating profit, implying a trend far above initially expected for earnings, although being based on conservative assumptions. For example, it is believed that surging sales overseas for Q1 to Q2 were driven by a recovery in actual demand and inventory buildup at distributors, while the latest Company forecasts assume that the latter will not reappear for H2, reducing demand to a corresponding extent.

On 26 November 2021, Sanyo Homes, running operations to build housings on a contract basis and develop condos for sale, held its financial results briefing for Q1 to Q2 FY03/2022. It has been revealed that sales and earnings increased substantially, which is mainly attributable to a factor that the Company completed four buildings of condos (versus none during the same period of the previous year) as initially planned, having led to delivery and thus booking of sales for them. However, the Company suggests that order intake of condos has not progressed as much as assumed in initial Company forecasts (announced on 14 May 2021). Consequently, full-year Company forecasts have been revised down (announced on 5 November 2021), i.e., by ¥7,200m (10.7%) for sales and ¥800m (61.5%) for operating profit, having assumed shortfall of sales on the Condos Business side. Nevertheless, the Company is seeing steadily increased order intake and order backlog on the Housing Business side, which is expected to play the most significant role to drive earnings in midterm management plan (FY03/2022 to FY03/2024). Meanwhile, the Company, which is aiming for initiative-taking shareholder returns, has maintained its prospective annual dividend of ¥25.00 per share, implying payout ratio of 92.2%, even after downward revision for full-year earnings this time.

NIRAKU GC HOLDINGS, which aims to shift to “comprehensive entertainment company” from a long-term perspective, is to see a V-shaped recovery in earnings from FY03/2021 to FY03/2022. This is mainly attributable to gross pay-ins to recover and costs to decline for operations of running pachinko and pachislot halls in eastern Japan, which has an overwhelming impact on performance for the Company as a whole now. For FY03/2021, the Company saw gross pay-ins having had declined sharply due to the ongoing COVID-19 situation. Gross pay-ins in FY03/2020 being set at 100%, the Company saw no more than 68% for FY03/2021, while going for a recovery up to some 75% to 80% for FY03/2022. At the same time, the Company suggests that it has drastically re-evaluated the hall operations and made expenditures streamlined with an assumption of gross pay-ins to recover to this level at least. Meanwhile, the Company is to see depreciation charges reduced for FY03/2022, corresponding to huge impairment conducted for FY03/2021. With respect to operations in ex-Japan Asia where the impacts stemming from COVID-19 are even larger than in Japan, the Company has already restarted running Japanese restaurant food court in China, while it has remained still unclear when to restart operations of running amusement arcades in Vietnam and Cambodia. From a long-term perspective, it appears that the Company is planning to resume investments for all those operations in ex-Japan Asia, but the Company’s immediate policy is to concentrate own management resources upon the mainstay operations to run pachinko and pachislot halls to ensure rebuilding of the operations, which is to be followed by a trend of expansion.

On 25 November 2021, KAGA ELECTRONICS, independent electronics trading house, has announced Midterm Management Plan 2024 (FY03/2023 to FY03/2025). It has been revealed that the Company has a policy to continue growing into long-term future with a view to further M&A. While the current Midterm Management Plan 2021 has been going for prospective operating profit of ¥13,000m for FY03/2022, the final year of the plan, the latest Company forecasts, after upgrade (announced on 4 November 2021), are now going for ¥15,000m. On top of better-than-expected performance on a parent basis in line with recovery of the market conditions, the Company also benefits a lot from improved earnings in KAGA FEI and EXCEL where it makes a favorable progress in PMI (Post-merger Integration). Meanwhile, Midterm Management Plan 2024 is targeting to achieve prospective sales of ¥750,000m (CAGR of 16.9%) and operating profit of ¥20,000m (10.1%) for FY03/2025, the final year of the plan, with an assumption of seeing sales of ¥600,000m (8.5%) and operating profit of ¥20,000m (10.1%) on an organic basis, implying operating profit margin edging up on this side. For prospective addons from new M&A, the plan assumes sales of ¥150,000m, while conservatively assuming operating profit of break-even. Further, on the announcement of new midterm management plan, the Company has also announced its long-term guide line of CHALLENGE 1.60 (Ichirokumaru) at the same time, calling for prospective sales of ¥1trillion for FY03/2028, when it celebrates its 60th anniversary of founding, as well as Long-term Sustainability Management Plan to actively correspond to SDGs.

On 11 November 2021, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 to Q2 FY03/2022 results. It has been revealed that the Company’s performance continues to recover beyond expectations. Compared with the same period of the previous year, when business activities in various manufacturing industries in Japan and overseas were stagnant due to the ongoing COVID-19 situation, sales increased significantly in all regions, principally comprising China and Japan. Thus, the Company, seeing depreciation charges having declined in line with impairment in the past years, is now substantially benefiting from effect on increased sales at the same time. As a result, the Company has renewed its record high earnings across the board with respect to Q1 to Q2 performance. Given the improvement in market conditions being steadily reflected in performance, it should be the case that the Company is competitive to more than a certain extent in its operations, implying a high probability to benefit from the market growth from a long-term perspective. Towards the end of March 2022, the Company plans to announce its long-term management plan to start with FY03/2023, disclosing future performance targets. Meanwhile, with respect to the actual results in Q2, the Company is to begin distributing a video explaining the performance in depth from 15:00 on Friday, 19 November. We are to watch this video, which is followed by our interview with management through a web-based conference. In light of the contents of both, we are to update PUNCH INDUSTRY (6165) Entering Growth Phase (5 July 2021) and release anew.

On 12 November 2021, Shinwa, mainly manufacturing and selling system scaffoldings, released its Q1 to Q2 FY03/2022 results. It has been revealed that revenue and operating profit continue to recover, exceeding assumptions of initial Company forecasts. For the construction industry in Japan, where the Company's mainstay system scaffoldings are facing, business conditions are showing trends of picking up, particularly in private demand. Meanwhile, the Company, which has continued to steadily capture the recovery in demand accompanying this, has revised up its full-year Company forecasts. In terms of earnings, the price hike of steel, which is main raw material of system scaffoldings, is continuing and this is a major negative factor. However, in addition to the effects of higher sales, the Company says that revision of selling prices (due to the price hike of steel) and the continued improvement in sales mix are giving positive impacts. On Monday, 29 November 2021, the Company is to release a video explaining its financial results to disclose information more in depth, whose access information will be announced by us later. Meanwhile, we are to update Shinwa (3447) Low-rise to Superhigh-rise (5 July 2021) to release anew in light of the contents of the said video and upcoming interview with management.

On 4 November 2021, UZABASE, advocating "we guide business people to insights that change the world" as own mission, released its Q1 to Q3 FY12/2021 results. It has been revealed that the Company saw a recovery in SaaS sales growth rate up to 28% for Q3 (July to September), while it is suggested that the achievement of a growth rate of 30% is in sight. Further, the Company plans to maintain a long-term growth rate of 30% or more by continuing to promote the growth of existing products and continuing to release new products through aggressive efforts to invest in future growth, represented by enhancement of hiring for engineers. According to the Company's suggestion, ARR of total SaaS comprising SPEEDA, FORCAS and INITIAL for Q3 (July to September) reached ¥8,522m, having seen a recovery of growth rate up to 25% in terms of change over the same period of the previous year. Meanwhile, the contribution from SPEEDA Expert Research, FORCAS Sales, and SPEEDA Edge has increased SaaS sales growth rate more than the growth rate of ARR. On Thursday, 16 December 2021, at 6:00–7:00 PM JST, the Company plans to hold Briefing Session on Long-Term Strategy (Up to 2025) on the web for the sake of announcement of business strategy, including quantification of prospective earnings. When the details are confirmed, we are to send out e-mails to take part in, while planning to update UZABASE (3966) Persistently Realizing High Growth (9 April 2021) to release anew in light of the contents of the briefing.

On 4 November 2021, SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, released its Q1 to Q2 FY03/2022 results. It has been revealed that surging sales overseas are bringing in a major improvement for earnings. The impacts stemming from COVID-19 have eased overseas, driving sales of existing products, mainly in North America, Europe and China. For all those regions overseas, the Company suggests that it has been seeing increased local market shares, partly because of the lack of supply of products by peers in there. The Company, which is committed to contributing to dentistry around the world, appears to be steadily capturing a rapid recovery in local demand as it has been steadily strengthening its local product-supply system on top of developing its sales network in various regions overseas. Meanwhile, Company forecasts for H2 (October 2021 to March 2022) appear being based on conservative assumptions, considering the possibility that temporary demand may have been generated due to the accumulation of distribution inventories, etc. We are to watch the Company’s financial results briefing on the web, scheduled for Thursday, 24 November, which will be followed by our interview with management on the next day, so that we should be able to update SHOFU (7979) Contributing to Dentistry around the World (5 July 2020) and release anew.

Japan Living Warranty to advocate "putting 100-year value into all homes" has successfully launched long-term warranty for homes, while suggesting this will realize sustained growth for the Company as a whole with its rapid developments in the operations. By FY06/2025, sales of long-term warranty for homes are to exceed those of the Company as a whole in FY06/2021, do we estimate based on the Company’s suggestions. More importantly, the Company sees limited incurrence for cost of sales in the operations as sales are of commission income, generating a substantial impact for prospective earnings. Meanwhile, extended warranty for housing equipment, the key earnings pillar so far, has evolved into the core of management support consulting, provided to housing business operators, from the perspective of after-purchase servicing, suggesting a further growth for the future. On top of this, the Company has conspicuously benefited from horizontal application of knowhow on extended warranty and repair arrangement, fostered in the operations of extended warranty for housing equipment. That is to say, commission income has surged for representative service of desk work for buying extended warranty for equipment associated with regenerated energy and tablets. It is not too much to say that significantly increased sales and earnings for the Company as a while in FY06/2021 were brought about by those on the BPO side in charge of all those operations. On the Total Housing Maintenance side in charge of extended warranty for housing equipment as the key source of earnings, the Company saw earnings stagnated. Sales are increasing steadily, which has been offset by increased expenses incurred by aggressive growth-oriented investment, according to the Company. Still, this has laid the foundation for rapid expansion of long-term warranty for homes for the future.

On 6 August 2021, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 FY03/2022 results. It has been revealed that sales are increasing more significantly than initially expected in terms of changes over the same period of the previous year, having resulted in FY03/2022 Company forecasts being revised up. First of all, this is attributable to a conspicuous recovery of demand in China. The Company suggests that order intake is so firm in particular for the domains associated with electronic components, semiconductors and medical equipment. However, assumptions for H2 have remained unchanged. In other words, the Company has been assuming that the fears of economic slowdown cannot be dispelled for H2 in light of risk associated with re-expansion of COVID-19 and geopolitical risk such as resurgence of trade friction between the United States and China. FY03/2022 Company forecasts have been revised up by ¥900m (2.5%) for sales and by ¥350m (15.9%) for operating profit. With respect to operating profit, full-year Company forecasts have been revised up by as much as the amount of upward revision for Q1 to Q2 and thus prospective operating profit for H2 has remained unchanged.

On 11 August 2021, Japan Living Warranty, which advocates “Putting 100-year Value into all Homes”, released its FY06/2021 results. It has been revealed that surging sales and earnings resulted in renewal of record high performance. The Company provides warranty services for various facilities, etc. related to housings through collaboration with partner non-life insurance company, seeing consistently increased balance outstanding of policy on the Total Housing Maintenance side for operators of housing business as well as massively cultivating new markets on the BPO side for manufacturers of facilities. Meanwhile, the Company aims at “realizing a move to next phase with the 5 pillars for growth” from a long-term perspective. In other words, the Company plans to see persistent growth by means of actively investing in the development of new schemes and/or sales promotions of new services. For example, the Company announced that it had started providing Asset Value Warranty Program on 30 June 2021. With technology of warranty, e-money and AI scoring all being crossed, the Company is trying to get at improvement of asset value of wooden detaching housings, while revealing its intention to aggressively propel sales of such services for FY06/2022. We are to have an online interview with management in order to discuss the issues more in depth, so that we should be able to launch our Company report to be extensively distributed.

On 12 August 2021, Shinwa, mainly manufacturing and selling system scaffoldings, released its Q1 FY03/2022 results. It has been revealed that the Company is seeing substantially increased sales and earnings, being able to steadily capture recovery of demand driven by upbeat in business condition. The mainstay system scaffoldings are seeing revenue increased by almost 50% over the same period of the previous year, while safety measure equipment, which has high added value and thus high gross profit margin, is increasingly adopted for system scaffoldings, which looks compensating for pressure on earnings stemming from soaring steel prices. Meanwhile, so far in Q2 (July to September), the Company has revised unit selling prices of system scaffoldings and other products in line with steep rise in steel prices, which is expected to make full-year Company forecasts almost immune to the impacts stemming from here. Elsewhere, the Company, being keen on returning earnings to shareholders, announced that it had completed repurchase of own shares (380,000 shares or ¥299m) on 31 May 2021. When based on Company forecasts and prospective annual dividend of ¥32.0 per share, implying payout ratio of 40.0%, we estimate that total return ratio would be 65.5% = (¥32.00 × 13.7m shares + \299m) ÷ ¥1,128m for FY03/2022.

On 5 August 2021, UZABASE, advocating that “we guide business people to insights that change the world” as own mission, released its Q1 to Q2 FY12/2021 results. It has been revealed that sales of continued operations in Q2 (April to June) increased by 33% over the same period of the previous year. As a consequence, it has been spotted that sales as a whole for the Company are now running ahead of Company forecasts. The Company is making steady progress in implementing growth investment to consistently realize sale growth rate of 30% or more for FY12/2022 and thereafter, implying an improved probability for the Company to achieve the growth as anticipated over a long-term perspective. In June 2021, MRR came in at ¥924m (up 19%), while sales other than MRR increased even faster in Q2 (April to June). Sales associated with advertising, etc. are surging, while the Company suggests that those of new operations represented by Expert Research will be contributing for the future. With respect to “FORCAS”, whose MRR is increasing fast in particular, the Company is looking to a high growth potential even further, given the fact that it is exposed to a large size of TAM (Total Addressable Market). With an objective of accelerating the growth for this domain, the Company has launched “FORCAS Sales (a productivity-boosting research platform tailored to the needs of sales teams)”, while some users have highly appreciated its effectiveness to date, according to the Company.

On 5 August 2021, KAGA ELECTRONICS, independent electronics trading conglomerate, released its Q1 FY03/2022 results. It has been revealed that the Company is seeing performance better than assumed in FY03/2022 initial Company forecasts (announced on 13 May 2021). Still, initial Company forecasts have remained unchanged due to uncertainty for the future, represented by shortage of semiconductors and the impacts stemming from COVID-19. In terms of performance for Q1 by segmentation of midterm management plan, the Company sees a recovery of demand in a wide range of fields on the Electronics Components side, while favorably increased demand associated with automotive, industry equipment and medical products on the EMS side. On top of this, the Company has made a steady progress in PMI（Post Merger Integration) with acquired subsidiaries, i.e., KAGA FEI (formerly, Fujitsu Electronics) and Excel, having resulted in a turnaround to surplus at the operating level for both. Meanwhile, the Company repurchased own shares from the largest shareholder (6 August 2021) through ToSTNet-3, i.e., 1,231,700 shares or ¥3,647m, equating to 4.48% of shares outstanding but for treasury shares. By the way, the repurchase of own shares this time has a scale much larger than the latest one (8 November to 20 December in 2016), i.e., 818,900 shares or ¥1,499m or 2.89%.

On 30 July 2021, Sanyo Homes, mainly running operations to build housings on a contract basis and develop condominiums, released its Q1 FY03/2022 results. It has been revealed that order intake is increasing steadily. On the Housing Business side, order intake came in at ¥5,668m (up 26.7% YoY). The Company suggests that its measure of making changeover from “passive” to “proactive” for its sales strategy principally on the mainstay detached housings is starting to succeed. With respect to rental/welfare housings, it appears that the Company is now seeing a recovery in order intake. Meanwhile, on the Condos Business side, order intake came in at ¥5,107m (up 18.4%). Order intake related to four properties scheduled to be completed in Q2 is trending strongly. On top of this, order intake related to completed properties (completed condominiums) is also trending strongly, resulting in a surge in sales and an improvement in operating balance on the Condos Business side. In other words, recent trading suggests that the Company's midterm management plan (FY03/2022 to FY03/2024) is off to a good start. During the said period of the plan, the Company is calling for CAGR of 5.6% for sales and 41.2% for operating profit.

On 4 August 2021, SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, released its Q1 FY03/2022 results. It has been revealed that sales overseas are recovering sharply, surpassing sales in Japan. Sales overseas came in at ¥3,678m (up 113.8% YoY), while sales in Japan ¥3,292m (up 4.3%). For sales overseas by region, it appears that those of Europe are contributing most significantly. According to the Company, the impacts stemming from COVID-19 are now “rather easing”, which is raised as the key factor for the strengths. Meanwhile, those of North & Latin Americas as well as of China are also recovering nicely due to the same background. In terms of changes over the same period of the previous, the Company sees rate of increase even higher than that of Europe for all those regions. That is to say, it appears that the Company is steadily capturing increased demand across the region overseas, implying a success for the Company’s primary measure to cultivate markets overseas having been implemented for some time, which will make it possible for the Company to capture future increase in demand overseas from a long-term perspective.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, is seeing a favorable performance with steadily increased sales and earnings. On top of demand associated with semiconductors firmer than expected in FA cables, the key source of earnings, sales as a whole for the Company have been running ahead of expectations as a result of surging copper prices. In fact, FY10/2021 Company forecasts have been upgraded. This was also attributable to performance better than expected in consolidated subsidiaries based in Japan, according to the Company. Procurement prices of electric cables, basically made of copper, are supposed to hinge on changes in average copper prices quoted, which does take place for the recent rise in the said prices this time around as is taken for granted. Meanwhile, it appears that the Company is well passing this on to selling prices. However, gross profit margin is rather under pressure, because it takes a while to pass this on to selling prices, while the changes in copper prices are immediately reflected in procurement prices for the Company which adopts moving average cost method in evaluating inventory (merchandises). Even so, more importantly, it should be noted that gross profit margin is effectively immune to the changes from a long-term perspective as it only takes time for the changes to be reflected. Indeed, the Company, trying to get at steady growth in sales and earnings from a long-term perspective, is calling for CAGR of 7.7% in sales and 10.3% in recurring profit as target performance of midterm management plan (FY10/2021 to FY10/2024), mainly for the sake of ensuring its measure to actively return earnings to shareholders. For FY10/2021, the Company is going for total return ratio of 59.8%, implying that the Company, holding fat net cash, is also keen on improving capital efficiency.

Sanyo Homes, mainly running operations to build housings on a contract basis and develop condominiums, is trying to get at sustainable growth by means of making changeover from “passive” to “proactive” for its sales strategy principally on detached housings, the mainstay of Housing Business. As performance target for midterm management plan (FY03/2022 to FY03/2024), announced on 26 May 2021, the Company is calling for prospective sales of ¥62,900m, operating profit of ¥2,200m and operating profit margin of 3.5% for FY03/2024, the final year of the plan, implying CAGR of 5.6% for sales and 41.2% for earnings during the said period with an improvement by 2.0% points for operating profit margin. The Company is calling for increased earnings in Condos Business, currently the key source of earnings as a whole, while earnings to increase rather more in Other. More importantly, the Company is calling for earnings to increase even more in Housing Business, becoming the key factor for sustainable growth as a whole for the Company. It has been the case that the Company suffered from ongoing stagnation of earnings in Housing Business by FY03/2021, as a result of the mainstay detaching housings having had been on the downgrade. However, the Company suggests that order intake for Housing Business has been recovering from the beginning of FY03/2022, beefing up a probability for this segment to see soaring earnings as assumed in midterm management plan, having had hit the bottom for FY03/2021.

SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, plans to achieve long-term growth based on its long-term basic policy “As It Should” to cultivate markets overseas. For FY03/2021, sales and expenses declined in response to the impacts stemming from COVID-19, having renewed record high earnings as expenses declined more than sales. Meanwhile, for FY03/2022, sales overseas are to increase favorably, but earnings are to see a short-term correction in line with active spending to drive long-term growth potential. At the operating level, the Company also suffers from a decline due to the adoption of a new accounting standard. More importantly, the fourth midterm management plan (FY03/2022 to FY03/2024) is calling for steady increase in sales and earnings to persist for FY03/2023 and FY03/2024 in its performance target, conservatively setting a strategic investment line (buffer in expenses). Meanwhile, the Company advocates to realize its corporate philosophy “contribution to dentistry through innovative business activities”, by means of achieving sales of ¥50,000m (¥17,000m in Japan and ¥33,000m overseas), operating profit of ¥7,500m and operating profit margin of 15.0% for the foreseeable future.

PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, appears to be entering growth phase. Demand is now recovering as the impacts stemming from COVID-19 are beginning to wane, while depreciation is being reduced due to impairment during the past three years. In terms of FY03/2021 results, sales in China (52.0% of the total) began to increase over the same period of the previous in Q2 and increased by no less than 10.9% in Q4. Meanwhile, sales in Japan (38.0% of the total) are said to have bottomed out in Q2, which was followed by a trend of recovery for Q3 and Q4. FY03/2022 Company forecasts (announced on 13 May 2021), taking into account above-mentioned trends, are going for full-year growth rate in sales of 12.4%, although assuming some risks for H2. It appears that sales growth rate in Chia is assumed to further accelerate and that sales in Japan are assumed to steadily increase. At the same time, the Company has been rebuilding its sales and manufacturing strategies in order to set up a robust management structure that will not lose out to changes in external environment. Rather than benefiting from balanced contraction by short-term cuts in fixed costs, the Company is now trying to get at long-term improvement in its corporate value by creating a mechanism to be able to persistently generate earnings in which all the personnel work in a unified manner under the direction of management led by representative director Tetsuji Morikubo.

Shinwa, mainly manufacturing and selling system scaffoldings, advocates to have come to a stage to be involved with products comprehensively for buildings low-rise to superhigh-rise, claiming that it runs the foremost production & distribution system in the industry. Meanwhile, the Company is planning to raise its growth potential from a long-term perspective by promoting such strengths. In the short-term performance, the contribution from business development in China is expected to be limited, while the hiking of steel prices are starting to give negative impacts following on those of COVID-19. Consequently, the Company's short-term earnings are likely to continue being under pressure. However, demand for system scaffoldings appears to be on a steady recovery trend, while the hiking of steel prices will be gradually passed on to unit selling prices of system scaffoldings and other products. It is the Company's business model to pursue the creation of added value resulting from its operations to supply metalworking products represented by system scaffoldings by means of plating and processing procured steel materials, while the Company suggests that procurement cost of steel materials accounts for roughly half of cost of goods manufactured. In light of this, it should be the case that prospective gross profit margin for the Company hinges on how long it will take to fully pass on the hiking of steel prices to unit selling prices of own products. Meanwhile, the Company will benefit from business development in China in a few years, increasing revenue on the Scaffolding Equipment side mainly comprising system scaffoldings by some 20% as far as we could see.

Startia Holdings, making progress in its measure to become a SaaS company, saw growth rate of some 30% in ARR related to its Cloud CIRCUS for FY03/2021, the first year of midterm management plan NEXT'S 2025 (FY03/2021 to FY03/2025), while being likely to see the same sort of growth rate from a long-term perspective. Cloud CIRCUS is an integrated marketing service that supports earnings growth at client companies by optimizing information held by client companies using a variety of SaaS tools (products) developed by the Company. For FY03/2021, the Company saw earnings declining due mainly to a factor that upfront spending was incurred on a full-fledged basis in order to ensure long-term growth of ARR. More importantly, however, Company forecasts are going for earnings improving for FY03/2022. Upfront spending is expected to get ever larger, but it is expected to be more than compensated for by the impacts stemming from further growth of ARR. Meanwhile, midterm management plan NEXT'S 2025 is calling for prospective sales of ¥31,000m and operating profit of ¥3,300m for FY03/2025, the final year of the plan. Based on the actual results of FY03/2020, the plan is calling for CAGR of 19.4% for prospective sales and 35.1% for operating profit during 5-year period up to FY03/2025. The Company is expected to achieve sustained high growth and improved profitability through steady progress in its measure to become a SaaS company.

On 27 May 2021, KAGA ELECTRONICS, one of the largest electronics trading companies, held its financial results briefing (web conference). It has been revealed that EMS business to mainly produce electronic substrates by commissioning is seeing performance better than previous expectations due mainly to strengths on in-car demand. There were concerns about the impacts stemming from COVID-19 at the beginning of the period, but the Company has renewed its record high in operating profit, recurring profit and profit attributable to owners of parent for FY03/2021. With the acquisition of Fujitsu Electronics (currently, KAGA FEI), gross profit margin as a whole for the Company continued declining for FY03/2019 and FY03/2020, but it was followed by a recovery in FY03/2021. According to Ryoichi Kado, President & COO, the Company has “evolved its capability to generate earnings”. Meanwhile, the Company appears to be planning to ensure long-term growth by strengthening its governance structure. The Company plans to increase the number of independent External Board Director and establish Nominating and Compensation Committee after upcoming General Meeting of Shareholders (held on 29 June 2021). Prior to this, the Company has established SDGs Committee to promote sustainability management in a manner that covers all the group companies across the board.

On 14 May 2021, Sanyo Homes, which develops housing and condominiums for sale, released its FY03/2021 results. It has been revealed that the Company is to see earnings to continue surging for FY03/2022. On the Condos Business side, accounting for the bulk of earnings as a whole for the Company, cost rate in FY03/2021 has improved due to the measure to curb discounts, while SG&A expenses have just edged up as a whole for the Company. Meanwhile, for FY03/2022, Company forecasts are going for increase in prospective sales on the Condos Business side and a trend of recovery in prospective sales on the Housing Business side, where sales have been stagnated due to the impacts stemming from COVID-19. On the Condos Business side, it appears that Company forecasts assume a marginal correction in segment profit margin in line with the Company’s measure to cut back on completed inventory (completed condominiums). However, this is expected to be more than compensated for by improving earnings on the Housing Business side. The Company is currently in the process of developing standardization of so-called ZEH (net zero energy house in Japanese English, representing housing for energy consumption to balance out by own energy generation) not only for detached housing but also for rental / welfare housing, etc. Compared with conventional specifications, the Company sees added value larger and thus gross profit, driving prospective earnings on the Housing Business side, according to the Company. Meanwhile, we are to interview with management on the web conference to discuss the issues of midterm management plan (announced on 26 May 2021), etc., so that we should be able to update Sanyo Homes (1420) Extreme Concentration (26 January 2021) and release anew.

On 13 May 2021, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its FY03/2021 results. It has been revealed that sales are now starting to recover and the same applying to earnings. In Japan, where the decline in sales over the same period of the previous year has continued to shrink, it appears that prospective sales are to increase steadily for FY03/2022, including those of so-called custom-made products to give substantial impacts to earnings as a whole for the Company. Meanwhile, in China, where sales have been recovering since having had hit the bottom in Q1 FY03/2021, the Company saw sales in Q4 increased by 10.9% over the same period of the previous year. FY03/2022 Company forecasts assume that such strengths in recent trading to persist for H1 (Q1 to Q2), while being based on rather conservative assumptions for H2, as far as we could gather. Still, Company forecasts are going for favorable performance on a full-year basis. We are to interview with management through a web-based conference, following on viewing a video to explain the financial results scheduled to be released for Friday, 28 May. Based on the information of both, we are to update PUNCH INDUSTRY (6165) Re-engineering Sales Strategy (22 January 2021) and release anew.

On 13 May 2021, UZABASE, advocating that “we guide business people to insights that change the world” as own mission, released its Q1 FY12/2021 results. It has been revealed that sales from continuing operations increased by 38% over the same period of the previous year, implying favorable startup for FY12/2021. In March 2021, the Company saw collective MRR of ¥883m (up 24% or ¥10,607m in terms of ARR), comprising that of SPEEDA, NewsPicks, FORCAS and INITIAL, while advertising revenue related to NewsPicks increased even faster mainly due to the rapid expansion of video advertising. Meanwhile, the Company saw EBITDA margin improved up to 21.1% for Q1, having had pulled out of Quartz Business which consistently suffered from loss. Nevertheless, for Q2 and thereafter, the Company is to unavoidably see some adjustments in earnings as assumed in Company forecasts in line with increasing expenses stemming from startup of growth investment on a full-fledged basis. With such growth investment to further drive existing operations, bring up new operations, enhance capability of development by hiring engineers, improve system, etc., the Company is going for performance target of continuing to increase sales by 30% from a long-term perspective. For prospective earnings from a long-term perspective, the Company is to disclose details after the results of FY12/2021.

On 14 May 2021, Startia Holdings, making progress in its measure to become a SaaS company, released its FY03/2021 results. It has been revealed that demand for Cloud CIRCUS is growing fast. Cloud CIRCUS represents services to support earnings at client companies by optimizing the information held by them using a variety of SaaS tools developed by the Company. In FY03/2021, the first year of Midterm Management Plan NEXT'S 2025 (FY03/2021 to FY03/2025), the growth rate of ARR (=MRR×12) related to Cloud CIRCUS has reached some 30%, while the high growth rate is expected to persist for FY03/2022. Meanwhile, when compared with the assumptions of Midterm Management Plan NEXT'S 2025, it appears that the acceleration of growth rate for ARR has occurred rather earlier. We are to watch the Company’s financial results briefing on the web, scheduled for Thursday, 20 May, which will be followed by our interview with management through web-based conference, so that we should be able to update Startia Holdings (3393) To Accelerate Further (2 April 2021) and release anew.

On 14 May 2021, SHOFU, developing, manufacturing and selling dental materials & equipment in Japan and overseas, released its FY03/2021 results. It has been revealed that record high earnings were renewed, although sales were forced to decline following the impacts stemming from COVID-19. Meanwhile, for FY03/2022, the Company's policy to aggressively make upfront investment, such as for the commencement of operations at a manufacturing subsidiary in Vietnam (fall 2021) with the aim of expanding sales in China and other countries and it is clear that the increase in short-term expenses will be not insignificant. Furthermore, since Accounting Standard for Revenue Recognition is adopted from the beginning of the fiscal year, there is an aspect that sales and operating profit will shrink compared with the actual results prior to this. However, Fourth Midterm Management Plan (FY03/2022 to FY03/2024) announced on the same day assumes operating profit of ¥2,618m for FY03/2024, the final year of the plan and thus a further renewal in earnings is expected. We are to watch the Company’s financial results briefing on the web, scheduled for Thursday, 27 May, which will be followed by our interview with management through the web-based conference, so that we should be able to update SHOFU (7979) As It Should (21 December 2020) and release anew.

On 13 May 2021, Shinwa, mainly manufacturing and selling system scaffoldings, released its FY03/2021 results. It has been revealed that earnings were rather better than assumptions of the most recent Company forecasts (announced on 12 February 2021), while the Company is to enhance shareholder return for FY03/2022. It appears that prospective gross profit margin for FY03/2022 will be under pressure, given a rise in prices of steel (the key raw materials for system scaffoldings and other products), presumably accounting for roughly half of cost of sales, while Company forecasts are going for steady increase in revenue. The situations have not changed that the impacts stemming from COVID-19 are unclear, but the Company suggests that the sentiment for construction work in Japan is likely to be robust, which is to drive demand for the Company’s system scaffoldings and other products. Meanwhile, the Company advocates to maintain payout ratio of 40% or more as the basic policy and is to do so for FY03/2022. On top of this, the Company is to buy back own shares, leading to total return ratio of 65.5% for FY03/2022 in our estimates. The Company is to hold online results briefing (26 May 2021) to discuss the issues more in depth. We are to watch it as well as interviewing with management afterwards, so that we could update Shinwa (3447) Paying Out 40% or More (15 January 2021) and release anew.

UZABASE, advocating that “we guide business people to insights that change the world” as own mission, has set performance target of persistently increase prospective sales by 30% from a long-term perspective. Meanwhile, the Company is to continue implementing growth investment to realize persistent sales growth rate of 30% for the future at the same time, resulting in EBITDA and/or EBITDA margin in each fiscal year inevitably depending on the extent of cost burden from growth investment during the same period. FY12/2021 Company forecasts (announced on 10 February 2021) are going for prospective sales growth rate of 21.5%, when excluding the impacts of having had pulled out of Quartz Business, as well as aggressive growth investment to accelerate sales growth rate up to 30% for FY12/2022 and thereafter. Given the latter, it appears that the Company is to see cost burden from growth investment substantial in particular. For example, “Priority Areas for Investment in 2021”, disclosed by the Company as initiative for FY12/2021, suggests collective cost burden from growth investment as much as some ¥1,650m (10.6% of sales). Consequently, it appears that FY12/2021 Company forecasts are going for almost the lower end of prospective range for EBITDA margin over a long-term perspective. In other words, when based on the actual results in FY12/2021, i.e., the first year with new management after having had pulled out of Quartz Business, the Company is likely to see improving EBITDA margin from a long-term perspective.

Startia Holdings, making progress in its measure to become a SaaS company, currently sees a trend of acceleration for the growth rate of MRR (Monthly Recurring Revenue) related to Cloud CIRCUS. Meanwhile, for Cloud CIRCUS, representing the Company’s services to optimize information held by client companies by means of a variety of SaaS tools developed in-house for the sake of maximizing earnings with them, the Company has started up aggressive investments to drive MRR and/or ARR (Annual Recurring Revenue) over a long-term perspective, which is expected to persistently increase prospective earnings for the Company. FY03/2021 initial Company forecasts (announced on 15 May 2020) assume ARR related to Cloud CIRCUS of ¥1,370m (up 7.9% YoY), while cumulative MRR in Q1 to Q3 has expanded to as much as ¥1,030m (up 13.8%). More importantly, the Company’s midterm management plan NEXT'S 2025 is going for prospective ARR of ¥4,800m for FY03/2025, i.e., the final year of the plan, implying CAGR of 30.5%, when compared with the actual results of \1,270m in FY03/2020. In other words, the Company is planning to steadily become a SaaS company from a long-term perspective.

URBANET CORPORATION, running real estate business mainly to develop and sell investment-oriented studio apartments on a per-building basis, currently suggests a direction to aggressively purchase lands for the sake of long-term growth. In Q1 to Q2 FY06/2021, it appears that the Company was highly selective in purchasing lands with a prospect that land prices in Tokyo’s central zone were to come down as to the immediate future given impacts stemming from COVID-19. As a result, the Company saw decreases in real estate for sale in process, while there have been no signs of a decline in real estate prices in Tokyo’s central zone in reality. Meanwhile, demand for investment-oriented studio apartments has remained firm in spite of a trend of decline in cap rate, because of their high stability as income properties. Thus, the Company appears to have become active in purchasing lands to date. At the same time, Hotel Business has started in earnest with the commencement of operations for HOTEL ASYL TOKYO KAMATA on 14 October 2020 and this is expected to gradually contribute to earnings as a whole for the Company from a long-term perspective. At the moment, the occupancy rate is low, inevitably making loss, due to the impacts stemming from COVID-19, but it is the case that the operations of this hotel (developed in-house and self-owned) are of “research and development” in the first place for future business to develop and sell hotels and thus it was originally expected that the operations were to make loss at the beginning.

On 5 February 2021, Sanyo Homes, which develops housing and condominiums for sale, released its Q1 to Q3 FY03/2021 results. It has been revealed that the Company sees performance in line with assumptions of Company forecasts. Over the same period of the previous year, sales have declined and loss has expanded, but sales on the Condos Business side will surge in Q4, which is expected to result in steady increases in sales and earnings on a full-year basis as a whole for the Company. Meanwhile, the Company, being keen on returning earnings to shareholders, is to pay year-end dividend of ¥25.00 per share, implying payout ratio of 54.2%, for FY03/2021. In Q4, the Company is to complete 8 buildings on the Condos Business side, including THE SANMAISON Shirokanedai (19 units: Minato-ku, Tokyo) and San Maison Shinkanaoka Residential (250 units: Sakai-city, Osaka-prefecture). To a large extent, the Company has already got orders and sales as a whole for the Company will surge driven by a series of delivery of all those properties to have been awarded contracts to do so in line with completion of construction. Meanwhile, this will bring a major improvement in earnings at the same time. It has been the case that sales on the Condos Business side were concentrated in Q4, while this trend is to accelerate markedly to an unprecedented extent for FY03/2021.

FREUND CORPORATION, developing, manufacturing and selling equipment as well as chemicals, is investing to beef up its long-term growth potential. In FY02/2021, the Company is to see a substantial improvement in earnings, while it appears that upward trend for its performance is to persist thereafter too. On 5 November 2020, the Company announced that it had invested some ¥1,200m to acquire a pharmaceutical manufacturing equipment manufacturer based in Italy (Cos.Mec S.r.l.) as wholly-owned subsidiary. The Company suggests that this is to bring about add-on sales of ¥300m to ¥400m for Q4 (December to February), while roughly breaking even for earnings after goodwill amortization. For FY02/2021 and thereafter, the Company is going for major synergies stemming from a factor that there are overlaps rather limited for product lineup and regions for sale. That is to say, the Company is looking to pursue opportunities to promote sales of material handling system and other equipment corresponding to needs in emerging countries, in which Cos.Mec S.r.l. has expertise, by means of utilizing sales network of the Freund Group, for example. Further, on 1 December 2020, the Company announced that it had concluded a contract to set up a joint company in China (capitalized at RMB 50m or some ¥800m: 49%-owned). This joint company is expected to start up its operations around May 2021, while the Company is to aggressively capture ever-increasing local needs for improvement of quality with pharmaceuticals, etc.

On 12 February 2021, eole, focusing on programmatic job advertisements, released its Q1 to Q3 FY03/2021 results. It has been revealed that the Company has started to see a recovery in the job advertising domain, accounting for the majority of sales on the mainstay “pinpoint and other programmatic ads” side, in spite of the fact that there are still no signs of a solid recovery in the external environment whose trend is implied by that of jobs-to-applicants ratio and/or the Number of Job Advertising Posted due to the impacts stemming from COVID-19. In Q3 (October to December), sales of the job advertising domain have increased by 24.9% over the same period of the previous year. Meanwhile, the number of job advertising posted on the Company’s JOBOLE has more than tripled up to almost 70,000. According to the Company, "switching from trades is further accelerating". The Company, which has high capability in programmatic ads, has been rebuilding its sales structure and reviewing its strategy with the aim of making use of the strengths as a differentiating factor more than in the past and it appears that a big achievement is now being created. In other words, it should be the case that awareness of the superior cost efficiency brought about by the Company’s high capability is now improving. According to the Company, it costs less with the Company to obtain a certain amount of effect by advertising when compared with trades from an advertisers’ perspective. Meanwhile, the Company suggests that it has been making a steady progress as expected for operationalization and/or monetization of programmatic job advertising platform HR Ads Platform to have been launched on 12 October 2020.

On 10 February 2021, PUNCH INDUSTRY, manufacturing and selling parts of molds & dies in Japan and overseas, released its Q1 to Q3 FY03/2021 results. It has been revealed that sales in Japan have recovered, including those of special order products carrying high gross profit margin, for Q3 over Q2, while it has turned out to be the case that demand in China is recovering rather faster than expected. Driven by all those factors, sales are running ahead of assumptions in the latest Company forecasts (announced on 11 November 2020), having resulted in upward revision for FY03/2021 Company forecasts. Having had posted impairment loss, it was inevitable that Company forecasts were going for deficit in profit attributable to owners of parent, but Company forecasts are currently going for surplus at this level. Still, even after this, the Company has maintained its intention to suspend yearend dividend, but it appears that the Company is likely to reconsider the issue at the end of the day. Meanwhile, the Company has reiterated that it runs the operations with a policy to pursue enhancement of its corporate value over a long-term perspective, working to cut back on costs and re-engineer sales strategy in order to build a robust management structure that will not lose out to changes in the external environment. This is expected to create a mechanism to generate earnings in a sustainable manner rather than those from balanced contraction due to short-term cuts in fixed costs and other factors.

On 12 February 2021, Shinwa, mainly manufacturing and selling system scaffoldings, released its Q1 to Q3 FY03/2021 results. It has been revealed that the latest Company forecasts (announced on 29 October 2020) will be exceeded. The background to this is that demand has turned out to be firmer than expected for high-value added safety-measure equipment, which is indispensable for implementation of so-called Handrail Presetting (a method of construction) to eliminate crash disasters associated with scaffoldings. Despite the impacts stemming from COVID-19, the importance of safety at construction sites continues increasing, driving adoption rate of safety-measure equipment in the Company’s system scaffolding and other items. With a feature of high added value, it appears that safety-measure equipment is contributing a lot to gross profit margin as a whole for the Company. Meanwhile, with respect to manufacturing subsidiary based in China, GUANGDONG NISSHIN-CHUANGFU ADVANCED CONSTRUCTION MATERIALS Co., Ltd. which was set up in November 2019, the operations to locally manufacture and sell system scaffoldings and other items have started up since June 2020, although the startup was delayed by the impacts stemming from COVID-19. In our estimates, when assuming full-scale operations in a few years, its revenue would be as large as equating to some 20% of revenue on the Scaffolding Equipment side at the moment.

On 9 February 2021, SHOFU, developing, manufacturing and selling dental materials & equipment, released its Q1 to Q3 FY03/2021 results. It has been revealed that full-year operating profit assumed in Company forecasts (announced on 28 October 2020) was almost achieved. It appears that this is due mainly to V-shaped recovery in sales overseas. The impacts stemming from COVID-19 has reduced access to dental care, while sales activities have been consistently restricted, according to the Company. Nevertheless, sales overseas in Q3 (October to December) have increased over the same period of the previous year. In response to the impacts stemming from COVID-19, sales overseas were forced to plummet in Q1 (April to June), but it was followed by a recovery in Q2 (July to September), up to almost as high as the level of the same period of the previous year and then by a further recovery in Q3 (October to December). In H2, Company forecasts have assumed a major adjustment for sales in the United States and Europe where the number of infected people has surged, which proved unfounded as far as we could see. The impacts stemming from COVID-19 are uncertain for the future, but it appears that the Company's measures to promote sales overseas have been successful.

Pharma Foods International, developing biotechnology-based business triangle (drug discovery, ingredients and mail order), is to see a change in the market for listing to the 1st section from the 2nd in Tokyo Stock Exchange on 12 February 2021, while currently seeing a surge in regular purchases on the Mail-order Business side. In the history leading up to FY07/2019, the contents of regular purchases were of nutritional supplements and cosmetics developed by the Company via mail order, while the majority is currently of “Newmo® Hair Growth formula” to have been newly launched in FY07/2020. The number of customers for regular purchases stood at 576,941 (up 3.4 times YoY) as of the end of Q1 FY07/2021 as a whole for the Mail-order Business, while the surge in the number was due mainly to the increase of customers to purchase “Newmo® Hair Growth formula” on a regular basis. The strengths have continued into Q2, having resulted in the number of 701,171 as of 24 December 2020 for the customers to purchase on a regular basis, according to the Company. Given the effect of advertising launched in Q1 far greater than expected, it appears that there was a time temporarily that increase in demand for “Newmo® Hair Growth formula” had surpassed increase in production volume, but the Company has set up capacity to cope with volume needed for the foreseeable future to date. For H2, the Company is to curb spending on advertising, while regular purchases by customers already acquired are to persist, resulting in a massive concentration of earnings in H2 for FY07/2021 as in the past years. That is to say, so-called “model to turn profitable on a full-year basis” is going on. Meanwhile, on 26 January 2021, the Company has accounted that it enters into exclusive licensing agreement with Mitsubishi Tanabe Pharma Corporation for a new therapeutic antibody to treat autoimmune diseases for its Biomedical Business.

On 29 January 2021, DOSHISHA, planning, developing and selling private brand products as well as wholesaling well-known brand products and other items, released its Q1 to Q3 FY03/2021 results. It has been revealed that the Company is successfully implementing Blue Ocean Strategy and thorough inventory control at the same time, bringing a substantial improvement in prospective operating profit margin for FY03/2021. Meanwhile, the Company suggests that it is now going for a topline growth for FY03/2022 with a stability of profitability at the current level. For example, sales are firm for CIRCULIGHT series products which combine LED lighting with a circulator function. It is highly appreciated that they contribute to the creation of comfortable spaces, while it is recognized that they also have an effect to work as the measure against infectious diseases through their ventilation. On top of this, the Company has been seeing strengths in sales for private brand products planned and developed with unique angles not available in trades, as found in a new product, launched in November 2020, which is dedicated to those who have their tongues burnt with hot drinks, i.e., “Nekojita” Tumbler or a tumbler to keep a delicate heat of hot drinks at some 60℃ for a long time. Such a feature has made it so popular with the media and SNS and it has been in short supply at the storefront for some time. Sales are firm for all those proprietary private brand products that keep a certain distance from price-oriented competition, substantially driving sales and earnings on the Product Development Business Model side. Meanwhile, the Company has organizational structure and financial base that can provide customers with its products they want speedily and stably. In light of this, the Company has a good potential to see steady growth from a long-term perspective.

SENSHU ELECTRIC, technology-oriented trading house mainly of electric cables, is planning to achieve steady increases in sales and earnings from a long-term perspective. In FY10/2020, sales and earnings declined due to the impacts stemming from COVID-19, but the Company is going for a moderate V-shaped recovery in sales of FA Cables or the key earnings pillar for the Company in FY10/2021 over FY10/2020 and thus sales and earnings as a whole for the Company likewise. From a long-term perspective, meanwhile, the Company is going for CAGR of 7.7% for sales and 10.3% for earnings through FY10/2021 to FY10/2024 as well as achieving ROE of 8.0% or more for FY10/2024 (versus ROE of 5.9% in FY10/2020 actual results). Elsewhere, the Company remains being proactive in returning earnings to shareholders. At the moment, the Company is going for prospective shareholder return rate of 51.5% for FY10/2021, while it is considered that there is a massive leeway to proceed with share repurchases beyond the current plan in light of the fact that net cash has expanded to ¥18,356m as of the end of FY10/2020. The Company saw shareholder return rate of 70.7% in FY10/2020, having renewed record high. Another renewal may persist for FY10/2021.

Nihon Trim, mainly running operations to sell electrolyzed hydrogen water generator, is developing measures to nicely start up online sale. The Company saw almost no seminars held for its mainstay sales channel of so-called workplace sale in May 2020 due to the impacts stemming from COVID-19. However, this was followed by continued recovery in the number of seminars held, having resulted in the level as high as that of the same month of the previous year in October 2020. Meanwhile, on 8 December 2020, the Company launched “TRIM ION CURE”, developed to dedicate to direct sales through online sale. By the end of the fiscal year (March 2021), the Company is to implement upfront investment (some ¥300m) for sales promotion measures for online sale, implying that online sale is likely to take off on a full-fledged basis for FY03/2022. With respect to regenerative medicine and electrolyzed water dialysis system, the Company inevitably suffers from the impacts stemming from COVID-19 in the same way, but the Company suggests sales have recovered most recently for regenerative medicine owing to its successful focus on web marketing. At the same time, the Company claims long-term prospects are bright for regenerative medicine and electrolyzed water dialysis system. Shinkatsu Morisawa, the CEO, announced at financial results briefing held on 29 October 2020 that he was continuing to actively take management measures to gradually shift to “global medical company”.

On 26 November 2020, KAGA ELECTRONICS or independent electronics trading company held financial results briefing (web conference). It has been revealed that assumptions of initial full-year Company forecasts for FY03/2021 were exceeded in Q1 to Q2, although the Company suffered from decreased sales and earnings over the same period of the previous year. Sales declined due mainly to changes in commercial rights and distribution with large counterparty in the acquired Fujitsu Electronics. Meanwhile, the Company suggests that the impacts stemming from COVID-19 were smaller than initially expected in performance as a whole for the Company. On top of sales and earnings better than expected, the Company says that it has made progress in cost cutting amid the COVID-19 chaos in Q1 to Q2. In response to this, the Company reduced "risks due to COVID-19", which have been assumed in initial full-year Company forecasts, by ¥10,000m (minus ¥50,000m to minus ¥40,000m) for sales and by ¥2,500m (minus ¥3,500m to minus ¥1,000m) for operating profit, while having revised up full-year Company forecasts to the same extent. According to the Company, this has reflected sales and earnings better than expected in Q1 to Q2, leaving prospects for H2 unchanged. Meanwhile, sales and earnings increased in Q2 over Q1 and the Company says that the momentum for quarterly performance had hit the bottom in Q1, implying upside potential also for H2. In the explanatory video (in Japanese) disclosed by the Company on the website, President and COO Ryoichi Kado mentions measures against COVID-19 as well as the detailed status of PMI (Post Merger Integration) at acquired companies, while also referring to the Company’s proactive efforts for SDGs.

NIRAKU GC HOLDINGS, aiming at shifting to "comprehensive entertainment company" from a long-term perspective, is currently in the process of reforming its business given the impacts stemming from COVID-19. With respect to the mainstay operations to run pachinko halls in the eastern Japan region, the Company is proceeding with the strategy to close down loss-making halls whose gross pay-ins are unfavorable, while concentrating own resources upon those of seeing profitability relatively higher at the same time. In the first place, the Company has distinguished expertise to run pachinko halls, having resulted in increased market share for itself in FY03/2020, although the size of the market had continued declining gradually. With the strengths, the Company should be able to see benefits of being one of the survivors from a long-term perspective. In other words, the recent state of closing down halls could be regarded as a process to do so in the future. Meanwhile, new business developments in ex-Japan Asia, which are to drive shift to "comprehensive entertainment company", are also exposed to tough environment in line with the impacts stemming from COVID-19. For example, the Company has suspended the operations to run Japanese dish food court with a concept of YOKOCHO in Shenzhen Upper Hills or urban-type shopping complex based in Shenzhen, China, since around the end of FY03/2020. However, the Company is keen on starting over, when the market conditions recover in the future, to make progress with its aim to shift to "comprehensive entertainment company" together with other measures to do so.

On 14 August 2020, IBC, mainly selling System Answer Series, i.e., tool developed in-house for network system performance monitoring and information management, released its Q1 to Q3 FY09/2020 results. It has been revealed that sales have failed to increase over the same period of the previous year due to the impacts stemming from COVID-19. Meanwhile, given uncertainty for the prospective impacts for Q4, when sales and operating profit are to concentrate, full-year Company forecasts have remained undecided. So far, it has been severely constrained for the Company to continue conventional face-to-face sales activities, having resulted in sluggishness for acquisition of new customers, while multi-year contracts have been renewed for one-year contracts as a trend. Thus, sales have failed to increase. More importantly, however, one-year contracts have been renewed steadily, while demand is picking up sharply, amongst existing customers consistently using System Answer Series, for provision of additional services to cope with surging stay-home work and online communications. That is to say, assuming that stay-home work and online communications are becoming more and more common across the board in the post-COVID-19 world, demand for System Answer Series provided by the Company and its related services is likely to steadily grow over the long term.

KLab, developing and running game apps for Smartphones, is currently in the process of diversifying its earning sources. That is to say, the Company is planning to enter the casual game market for the sake of pursuing billing revenues based on the traditional business model, while strengthening so-called development support model for games overseas, which leverages the Company's strengths. Further, the Company is to support multi devices and/or platforms, to introduce in-game ads to existing game titles and to promote and/or strengthen subscription revenues. Most recently, the Company is seeing sales increased by contribution from large-scale new title, but also expenses increased stemming from here at the same time. Meanwhile, FY12/2020 initial Company forecasts have remained unchanged, going for steady increases of sales and earnings. In terms of median value, Company forecasts are going for prospective sales of ¥37,500m (up 20.5% YoY), operating profit of ¥2,000m (up 19.5%) and operating profit margin of 5.3% (down 0.0% point). It appears that Company forecasts assume as a factor that prospective earnings are to be driven by gradually increased contribution from diversification of earnings as time goes by. Meanwhile, the impacts stemming from COVID-19 have remained unclear. Demand from staying at home may pick up, while the Company suggests a possibility for development, etc. to delay with its business partners, etc. Thus, the Company reveals its intention to keep on watching the situations.

On 13 February 2020, OKADA AIYON, manufacturing, selling and providing maintenance services for demolition attachments (crushers and hydraulic breakers), released its Q1 to Q3 FY03/2020 results. It has been revealed that the Company is currently in a phase of short-term correction for earnings. In Japan, shipments of hydraulic shovels for which the mainstay crushers, etc. are attached is seeing decreased shipment volume due to typhoon damages that occurred in October 2019. In Q3 (October to December), the Company had to delay delivery of crushers, etc. Forestry grapples are also attached to hydraulic shovels and thus the same trend is inevitable. Meanwhile, in the markets overseas, sales in the mainstay North America are sluggish due to the slowdown in business confidence and sales in Asia came down sharply negatively affected by the impacts of trade frictions, etc. Sales in Europe are starting to take off nicely, but not as much as compensating for the slowdown in North America and Asia. Nonetheless, the markets that the Company faces in Japan are likely to grow steadily in a long-term view, while there remains considerable room for the Company to cultivate markets overseas.