TOW, focusing on the advanced development of planning & producing for integrated promotions, is strengthening its human capital management and making priority investments in the AI and environmental fields in order to achieve sustainable growth. This incurs a corresponding increase in costs, but the Company is to secure an increase in sales and earnings for FY06/2025 as it succeeds in its measures to enhance profitability by means of promoting fee-based operations and in-house producing. As initially assumed, the Company suffered from decreased sales in the actual results for Q1 to Q2 (July to December) due to the absence of projects related to a biennially-held large automotive exhibition, which posted sales during the same period of the previous year, while anticipating sales for H2 (January to June) to increase substantially over the same period of the previous year due to concentrated sales related to the World Expo. Meanwhile, it appears that the Company continues strategically raising personnel costs for FY06/2025, as it did for FY06/2024, in order to boost employee morale. Further, the Company suggests that 80% of employees have completed an AI learning program so far and the full-scale launch of business efficiency and sophistication through the use of AI tools is underway. On top of this, the Company also suggests that there has been an increase in environment-conscious proposals through the use of the Company's independently developed tool to access CO2 emissions at events, EventGX. In light of all those factors, it should be the case that the turning point from the current investment phase to the growth phase will arrive in the foreseeable future.

On 18 February 2025, EM SYSTEMS, which develops and sells IT systems of mission-critical tasks for pharmacies as the leader in Japan, held its results briefing on the web for FY12/2024. It has been revealed that the Company saw record-breaking levels for its performance due to contribution made by the implementation of M&As with sector peer companies as well as highly concentrated sales related to welfare administration, while being firmly committed to achieving its ROE target of 17% for FY12/2027 (versus 11.8% for FY12/2024) as projected in its midterm management plan (FY12/2025 to FY12/2027). In addition, the Company, which is actively engaged in shareholder return and capital policy, has increased its annual dividend for FY12/2024 from \29.00 to \35.00, implying payout ratio of 101.3%, while planning to maintain annual dividend of ¥35.00 also for FY12/2025, when suffering from a recoil reduction in performance stemming from the above-mentioned concentration of sales and so on, eventually implying payout ratio of 130.5%. On the mainstay IT Systems for Pharmacies side, the Company has set Expand Market Share of Wallets as its business strategy for the future, i.e., intending to raise ARPU related to usage fees and maintenance services of the relevant systems. The Company implies beginning to promote price revisions, upselling (to persuade adoptions of new functionalities) and so on in earnest for FY12/2025.

INTERLIFE HOLDINGS, running operations of interior finish work as well as design and construction of sound & lighting facilities, is on track to achieve considerable increases in both sales and earnings for FY02/2025, which is to be followed by sustainable growth for FY02/2026 and thereafter. For FY02/2025, the Company benefits from the concentration of sales for a number of large-scale projects, which looks inevitably resulting in a recoil reduction in sales for FY02/2026 to immediately follow. More importantly, however, it appears that the Company is likely to see an increase in earnings by means of focusing on projects carrying gross profit margin relatively higher. Meanwhile, the current FY02/2025 Company forecasts, announced on 27 August 2024, are likely to be exceeded, in that the forecasts were exceeded for earnings at the stage of the actual results for Q1 to Q3 (March to November), while the Company suggests no negative factors to arise for Q4 (December to February) as much as offsetting the said overshoots. At the moment, the Company is in the process of carefully examining recent trading for Q4 (December to February), while stating that it is to promptly revise up Company forecasts when necessary.

On 14 February 2025, Fast Accounting, which advocates business reform through accounting-specific AI, released its FY12/2024 results. It has been revealed that Company forecasts were exceeded, while expanding into the operations in the United States in February 2025, followed by an increasing contribution from the realization of accounting singularity. In the United States, the person in charge, assigned by the Company, has extensive knowledge and experience of Enterprise SaaS in the local area, while the Company is to start with a lean team and no advertising, executing local investments within scope of being able to secure operating profit margin of 10% for the Company. Meanwhile, for FY12/2026 and thereafter, the Company expects services related to accounting singularity to accelerate its growth potential. The Company has succeeded in developing AI to make decisions requiring accounting expertise, surpassing human capabilities as a result of its long-term dedication to AI development in the accounting domain. The Company is now entering a phase of providing the outcome as services. For FY12/2025, the Company has set a commitment to shareholders to achieve sales of \2,362m (up 38.4% YoY) and operating profit margin of 10.1% (down 0.5% points), which are assumptions of Company forecasts. Further, the Company has set a stretch goal of achieving sales of \10,000m and operating profit margin of 10% by FY12/2028. On top of ongoing growth in existing accounts payable automation services, the Company expects the above-mentioned overseas operations and services related to accounting singularity to kick in, followed by sustainable growth.

On 13 February 2025, NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers both in Japan and foreign countries, released its FY12/2024 results. It has been revealed that the last Company forecasts, announced on 5 December 2024, were exceeded, driven by a recovery in domestic demand for home-use gas water heaters & oil-fired boilers, better than assumptions. At the same time, the Company saw another positive factor for sales volume of gas water heaters & oil-fired boilers in China to have been better than assumptions in line with implementation of a subsidiary policy by the local government. Such performance made shareholders’ equity as of the end of the fiscal year larger than assumptions, having resulted in the upgrade of planned annual dividend for FY12/2024 from ¥67.00 to ¥69.00, based on the Company’s mark to realize “DOE of 2.5%“ on an average of shareholders’ equity basis for denominator. Further, the Company has announced that it will acquire own shares up to a total value of \2,000m or some 3.0% of the total number of issued shares excluding treasury shares. Looking forward, the Company is going for an ongoing recovery in its performance for FY12/2025 and thereafter, having hit the bottom for FY12/2024. We are to have an interview with the management to obtain further details in order to update and release our Company Report afresh.

On 5 February 2025, Sanyo Homes, running operations of building houses on a contract basis and developing condos for sale, released its Q1 to Q3 (April to December) FY03/2025 results. It has been revealed that operating profit margin is improving over the same period of the previous year despite a decline in sales. Meanwhile, the Company suggests that it is to intensively post sales for Q4 (January to March) and thus FY03/2025 Company forecasts, going for operating profit margin of 2.5% (up 0.5% points), are to be met. According to the Company, it is now beginning to see an improvement in cost rate, due mainly to the trend that it has begun posting sales in earnest with respect to those of properties whose unit prices being after a passalong of higher cost of labor in the fields of construction work and higher material prices at the stage of order placements. In particular, the Company is seeing a major improvement of cost rate for detached houses, while there was an improvement for a large-scale property completed and delivered for Q3 (October to December) as well. Another factor is that the Company benefits from an increased rate of capacity utilization in its own factory to manufacture materials in line with a policy to exploit them as much as possible. Meanwhile, the Company is to see an intensiveness in completion and delivery for properties on the Condos Business side for Q4 (January to March), which is to post a large amount of sales during the relevant period.

On 13 February 2025, TOW, focusing on the development of planning & producing for integrated promotions, released its Q1 to Q2 (July to December) FY06/2025 results. It has been revealed that performance is in line with assumptions of initial Company forecasts. The Company was forced to accept a decrease in sales and earnings due to the absence of contribution from a large-scale automotive exhibition that took place during the same period of the previous year, but going for a substantial year-on-year increase in sales and earnings for H2 (January to June) as it will intensively post sales associated with the Expo assignments. More importantly, the former will be more than compensated for by the latter, bringing in a steady increase in sales and earnings on a full-year basis. Meanwhile, for the sake of sustainable growth, the Company continues strengthening human capital management as well as implementing intensive investments in the domains of AI and environment, generating an aspect to see increased expenses. Still, there is another aspect for the Company’s measures to improve profitability working well, having resulted in nothing but a marginal decline in gross profit margin for Q1 to Q2 (July to December) in spite of a decline in sales. According to the Company, it has maintained high profitability due to its measures of focusing on fee-based operations that provide high added value and internal producing within the group. We are to interview with the management to obtain further details, so that we should be able to update and release our Company Report afresh.

On 14 February 2025, Shinwa, which mainly manufactures, sells and constructs scaffolding equipment, used in the fields of construction work, released its Q1 to Q3 (April to December) FY03/2025 results. It has been revealed that FY03/2025 Company forecasts are revised up due to factors such as an expectation to post revenue of a project associated with large-scale distribution warehouse on the Logistics Equipment side for Q4 (January to March). Meanwhile, on the Scaffolding Equipment side, the Company is going for a substantial increase in revenue and earnings in line with assumptions of initial Company forecasts. At the stage of Q1 to Q2 (April to September) results, there was an aspect that the Company saw revenue ahead of schedule in some part of the operations, which is to be leveled out on a full-year basis, as far as we could gather. Looking forward, the Company suggests that it is to achieve performance in line with assumptions of the midterm management plan (FY03/2025 to FY03/2029) for FY03/2026 and thereafter. On top of looking to synergy to take off in earnest stemming from acquisition of YAGUMI Group (the largest operator to construct scaffolding equipment in the Tokai region and one of the foremost in Japan), implemented as of the beginning of FY03/2025, the Company also suggests that it is to see large-scale projects on the Logistics Equipment side in addition to that of distribution warehouse.

On 31 January 2025, 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 Q3 (April to December) FY03/2025 results. It has been revealed that rapid growth in sales of COOPDECH AMY PCA, which is used for post-operative pain control, has continued and the said product is steadily contributing to increased sales and earnings of the Company as a whole. It is thought that the market in Japan is beginning to be developed in earnest due to the fact that the said product has superior characteristics compared to existing equivalents. Meanwhile, the Company is focusing on measures for developing markets overseas. Having made expansion in Europe its top priority, the Company is working to obtain MDR (Medical Device Regulation) certification, which is essential for launching products in Europe. As has already been disclosed, the Company will not be able to obtain the certification by the end of FY03/2025 in line with initial agenda, but the Company is continuing and strengthening its close collaboration with the certification organization, taking advantage of services from an overseas medical device development support company and trying to obtain the certification as soon as possible.

On 14 January 2025, INTERLIFE HOLDINGS, running operations of interior finish work as well as design and construction of sound & lighting facilities, released its Q1 to Q3 (March to November) FY02/2025 results. It has been revealed that the Company saw earnings higher than assumed in its full-year Company forecasts. The Company suggests that it has seen progress made earlier than planned for its work process of large scale projects, having accordingly posted sales and gross profit earlier than planned to a corresponding extent, which is mentioned as the main reason for the said performance. Full-year Company forecasts have remained unchanged, but we have an impression that the forecasts are to be consequently exceeded. In fact, the Company is currently in the process of examining recent trading since the beginning of Q4 (December to February). For FY02/2026, the impact stemming from concentration of sales associated with large scale projects will inevitably run its course, while it appears that the Company is trying to secure an ongoing increase in earnings by means of focusing on projects carrying high gross profit margin. We are to have an interview with the management to obtain further details in order to update our Company Report and release afresh.

SENSHU ELECTRIC, which focuses on developments of its business as electric wires general trading company, is calling for sustainable increases in sales and earnings from a long-term perspective, immediately after four consecutive years of the increases. For FY10/2024, the Company saw a stagnation in demand from some part of semiconductor production equipment and machine tools, belonging to the private capex realm, but it was more than compensated for by an increase in demand from automotive production lines, also belonging to the private capex realm, in addition to that of power cables and so on, belonging to the construction realm. The Company is exposed to a wide range of applications related to both of the private capex realm and the construction realm with the highest level of competitiveness in the market, which appears to realize so-called decoupling for the Company’s performance in a sense. That is to say, the Company’s performance and stagnation in some part of the applications to which it is exposed are not necessarily coupled. Furthermore, the Company has benefited from higher selling prices of electric wires for FY10/2024, driven by an increase in the Copper Prices and tighten supply-demand situations, which realized a substantial renewal of record-high sales and earnings. Meanwhile, the Company’s midterm management plan (FY10/2025 to FY10/2027) suggests CAGR of 5.5% for sales and 6.5% for recuring profit during the relevant period, which is based on conservative assumptions, including probabilities of any risk more than a certain extent, as far as we are concerned, while the Company reveals its intention to strive to achieve all the goals at an earlier stage than the last year of the plan.

Shinwa, which mainly manufactures, sells and constructs scaffolding equipment, used in the fields of construction work, is on track to continue achieving steady growth in both revenue and earnings. The midterm management plan (FY03/2025 to FY03/2029) suggests CAGR of 9.5% for revenue and 27.9% for operating profit. At the beginning of FY03/2025, the Company acquired YAGUMI Group (the largest operator to construct scaffolding equipment in the Tokai region and one of the foremost in Japan) as subsidiary, which made a major addon since the initial stage, having driven an improvement in the Company’s earnings for Q1 to Q2, which is to be followed by creation of synergy to gradually expand for H2 and thereafter, according to the Company. During the period of the above-mentioned midterm management plan, the Company states that it will achieve steady growth with a view to long-term growth by building a foundation for achieving further growth in the future. The Company is to pursue its strengths as a manufacturer of scaffolding equipment, while trying to create a fusion of this and the strengths as an operator to construct scaffolding equipment, newly acquired this time, which is expected to structure a solid value chain “from manufacturing to constructing” with respect to scaffolding equipment. In conclusion, this will make it possible to promote expansion in the business domains, according to the Company.

TOW, focusing on the development of planning & producing for sophisticatedly integrated promotions, has entered a phase in which its performance is leveling off after experiencing a significant increase in momentum due to changes in the external environment. For FY06/2024, the momentum in sales increased considerably as the Company steadily captured recovery in demand following the coronavirus crisis and the momentum in earnings, which were enjoying the benefits of increased sales, increased even more. Meanwhile, it is only natural that the momentum in sales enters a period of adjustment for FY06/2025, which immediately follows. However, the Company has begun strengthening its human capital management with a view to long-term growth since H2 (January to June) FY06/2024. Furthermore, the Company is making progress with its focused investment in themes such as AI and environment. In addition, on 31 October 2024, the Company concluded a basic agreement on M&A that can create a large degree of synergy, with the aim of accelerating its focus on integrated promotions. In other words, it can be said that the Company is currently in the process of preparing for a major leap forward from a long-term perspective.

NORITZ, mainly running operations to manufacture and sell gas water heaters & oil-fired boilers both in Japan and foreign countries, is in the process of aiming to recover its performance after two consecutive years of declining sales and earnings. For the operations in foreign countries, the Company has been suffering from stagnated market conditions in China for some time, while in Japan there was an improvement in profit and loss from Q2 (April to June) to Q3 (July to September) in terms of year-on-year changes, which is however suggested to have been followed by a sluggishness in sales of premium products carrying high gross profit margin for Q4 (October to December). For FY12/2024, on the other hand, Company forecasts are going for a substantial improvement at the non-operating level, while having already posted extraordinary profit during the period of Q1 to Q3 (January to September), and thus going for planned annual dividend of ¥67.00 per share, implying payout ratio of 81.4% and dividend on equity of 2.5% in line with the capital policy advocated with the midterm management plan V Plan 26 (FY12/2024 to FY12/2026), resulting in an increase of ¥14.00 per share, when compared to ¥53.00 for the actual results of FY12/2023. In the first year of the plan, the Company’s underlying earnings are under pressure due to a deterioration in external environment and so on, while it appears that the Company is currently in the process of formulating policies to realize a recovery in performance, hitting a major bottom for FY12/2024. For example, on 11 December 2024, the Company disclosed in a release titled, Overview of the Results of the Evaluation of the Effectiveness of the Company's Board of Directors, that it had set out issues to be addressed for FY12/2025. The specific issues set out appear to include measures to accelerate the promotion of Transformation of Business Portfolio, which is the key strategy of the midterm management plan V Plan 26, to a greater extent than before.

HAGIWARA ELECTRIC HOLDINGS, based in Nagoya, develops its operations as a technology-oriented trading house of auto electronics and aims to achieve long-term growth by means of pursuing its role of being “an engineering partner that is connecting human, society and technology, through advanced electronics”, which the Company has set out as its management vision. For Q1 to Q2 FY03/2025, sales have expanded to a record high due to acquisition of new transaction flows. In terms of earnings, however, the Company has seen gross profit margin being under pressure due to absence of windfall profit posted during the same period of the previous year, changes in sales mix and so on. Furthermore, the Company is stepping up its investment in human resources and systems with a view to achieving long-term growth, which has resulted in an increase in SG&A expenses and thus inevitably a decline at the operating level. During the period of the existing midterm management plan (FY03/2025 to FY03/2027), the Company aims to achieve structural reforms and establish a business foundation for a new stage of growth, implying it is currently essential to spend expenses to propel both of the policies to achieve the goal. In the short term, there have been unexpected production adjustments by auto-related customers and stagnant market conditions in China, having forced FY03/2025 Company forecasts revised down to a corresponding extent. From a long-term perspective, the Company is now looking to a major contribution to “improvement of earning power”, stemming from Data Platform realm recently launched.

INTERLIFE HOLDINGS, running operations of interior finish work as well as design and construction of sound & lighting facilities, is seeing a surging performance. The Company has successfully executed restructuring over the past several years, which has improved its profitability, while currently seeing a significant momentum in sales and thus a dominantly significant momentum in operating profit to benefit from higher sales, steadily capturing the uptick in construction-related demand. Consequently, the Company is now virtually seeing a changeover from negative value to positive value in its equity spread. Meanwhile, it appears that FY02/2025 Company forecasts, once already revised up, have a potential to be exceeded. The Company's priority issues for FY02/2025 are to “promote management with an awareness of the cost of capital and share price,” “strengthen profitability” and “develop new business, including one via M&A.” Currently, the Company is well making progress with all of those priority issues, which is to be followed by further focus on them for FY02/2026 and thereafter. On top of this, the Company is to focus also on investment in human capital, aiming to move to a new stage of growth.

MORESCO, running operations of R&D, manufacture and sale of chemical goods used in diverse applications with autos as the mainstay, promotes its 10th Midterm Management Plan (FY02/2025 to FY02/2027), centered on its commitment to MORESCO Green SX (MGS) Products, calling for CAGR of 6.0% in sales and 30.1% in operating profit during the relevant period, when setting the FY02/2024 results as the point of origin. Meanwhile, operating profit margin is to increase 3.3% points from 3.8% to 7.1%. The Company intends to improve its sales mix by enhancing sales of MGS products, which are considered to have relatively high added value and thus gross profit margin due to their contribution to reducing environmental impact and so on, looking to the above-mentioned steady increases in earnings. For Q1 to Q2 FY02/2025, sales of wastewater treatment equipment, which are certified as MGS products, expanded significantly, indicating that the Company is making steady progress in expanding sales of MGS products in line with assumptions of the Midterm Management Plan. The sales composition ratio of MGS products from FY02/2023 to FY02/2024 has increased from 29% to 33%, while the Company plans to achieve 40% for FY02/2027, the final year of the plan.

On 29 November 2024, Sanyo Homes, running operations of building houses on a contract basis and developing condos for sale, held its results briefing for Q1 to Q2 FY03/2025. It has been revealed that the Company saw gross profit margin of 20.3% (up 1.1% points YoY) despite sluggishness in sales. On the Housing Business side, which is responsible for building houses on a contract basis, the Company has begun benefiting from the impact of price revision in earnest, having resulted in gross profit margin of 20.6% (up 3.2% points). Meanwhile, on the Condos Business side, which is responsible for developing condos for sale, the Company saw gross profit margin of 19.9% (down 2.2% points). During the same period of the previous year, the Company posted sales of newly completed properties, carrying high gross profit margin, while the Company did not see any new properties completed for Q1 to Q2 FY03/2025. However, the Company has posted sales of properties already completed with gross profit margin rather higher than originally planned. More importantly, the Company is to post sales of properties newly completed as many as seven in the number of buildings for H2, which is to result in an increase in the Company’s sales and earnings on a full-year basis.

On 28 November 2024, KAGA ELECTRONICS, major electronic components trading company, held its on-the-web financial results briefing for Q1 to Q2 FY03/2025. It has been revealed that Midterm Management Plan 2027 (FY03/2026 to FY03/2028), released on 6 November 2024 together with the actual results, has detailed policy-related scenarios. The performance goals on an organic basis calls for lower limit of ¥700,000m in prospective sales and ¥35,000m in operating profit for FY03/2028, the final year of the plan, implying CAGR of 8.0% and 10.4%, respectively, when setting FY03/2025 Company forecasts as the point of origin. Meanwhile, the managerial goals for achieving sales of ¥1.0 trillion coming in sight calls for lower limit of ¥800,000 in prospective sales and ¥36,000m in operating profit as well as ROE of 12.0%, up 0.5% points from 11.5% for FY03/2025 Company forecasts. During the three-year period, the Company plans to generate cash of about ¥60,000m on a cumulative basis, which are to be allocated mainly to growth investments and shareholder returns. With respect to growth investments, including those of acquiring sector peer companies, the Company plans to allocate about ¥30,000m, while suggesting a possibility to raise the upper limit of the investment framework by utilizing debt financing when necessary. With respect to shareholder returns, the Company has newly set the target to achieve DOE of 4.0%, while going for payout ratio of 30% to 40%, up from the previous target of 25% to 35%, planning to allocate ¥22,000m to ¥30,000m on a cumulative basis during the relevant period.

On 14 November 2024, Fast Accounting, which advocates business reform through the use of accounting-specific AI, released its Q1 to Q3 (January to September) FY12/2024 results. It has been revealed that sales are persistently growing fast and are likely to continue doing so from a long-term perspective as well. The Company aims at achieving sales of \10,000m by FY12/2028. For Q1 to Q3 (January to September), sales have increased 41.0% over the same period of the previous year, while the Company calls for future CAGR of higher than 30% in sales related to the existing operations of Account Payable Automation. At the moment, the Company operates a SaaS business serving 135 client companies, including 106 large-sized ones acquired through a combination of direct sales and partner sales activities, which is rare in Japan, while seeing Average Revenue per Account (ARPA, i.e., MRR, divided by the number of client companies) of some ¥1.0m with a stability. The Company suggests that the number of large-sized companies stands at some 4,000 in Japan, when based on the concept of Service Available Market (SAM), implying a great room for further development. On top of this, the Company is to begin posting sales related to E2E (ERP to ERP) Process Realm from FY12/2025, which is based on a horizontal expansion of the existing Account Payable Automation. Then, this is to be followed by another one of Platform Realm from FY12/2026, resulting in a potential to achieve sales of \10,000m in the future, according to the Company.

On 14 November 2024, MUGEN ESTATE, running purchase and resale of pre-owned real estate mostly in the Tokyo metropolitan area, released its Q1 to Q3 (January to September) FY12/2024 results. It has been revealed that the Company continues to see a significant increase in sales and earnings. While the real estate market continues to boom, the Company's policy of focusing on expanding sales of high-priced properties, which are highly profitable, is succeeding, which results in a steady uptick trend of gross profit margin. It appears to be another important factor for the strengths of the Company’s performance that it steadily meets buoyant demand for investment-type properties from investors based in ex-Japan Asian counties such as China and Taiwan or so-called “inbound demand”, which is boosted by yen’s depreciation and so on. According to the Company, this trend is also applicable for residential-type properties as well. Thus, sales are expanding favorably, while the Company is increasingly purchasing properties, resulting in a high level ongoing for the balance of real estate for sale outstanding (inventory), which is the source for the Company to post sales for FY12/2025 and thereafter. The Company suggests that it reveals its prospective performance target for FY12/2025 and thereafter in the form of new midterm management plan when it releases the actual results for FY12/2024.

On 14 November 2024, EM SYSTEMS, which develops and sells IT systems of mission-critical tasks for pharmacies as the leader in Japan, released its Q1 to Q3 (January to September) FY12/2024 results and new midterm management plan (FY12/2025 to FY12/2027) at the same time. It has been revealed that recent trading is running ahead of assumptions made earlier, driven by rush demand associated with so-called welfare administration, having resulted in upward revision for full-year Company forecasts. In line with government policy, the Company is in charge of providing own customers using its IT systems for pharmacies with electronic prescription systems to be installed, while the demand is now picking up sharply. With the revision of medical service fees in June 2024, there was an addon newly set up to promote medical DX, which was followed by a notification for the administration to suspend subsidies related to adoption of the said systems as of the end of CY2024, resulting in the above-mentioned rush demand, according to the Company. Meanwhile, the Company expects this to increase the installation rate of the said systems amongst own customers to 70% to 75% as of the end of December 2024, while the Company will post sales for the remaining 25% to 30% from the beginning of FY12/2025. Under assumptions of the new midterm management plan, the Company’s sales are to inevitably suffer from a reversal of the above-mentioned acceleration from FY12/2024 to FY12/2025, even as a whole, consequently. More importantly, however, excluding the impact of all those developments related to the welfare administration, the Company is on track for sustained growth from a long-term perspective.

On 14 November 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 Q3 (January to September) FY12/2024 results. It has been revealed that sales are stretching in the North American market, the mainstay by region, with respect to the Outdoor Power Equipment side. It appears that this is driven by increased sales volume and yen’s deprecation to a large extent. The Company posted sales of \70,897m (up 18.4% YoY) for Outdoor Power Equipment in the Americas, where those of the North American market are almost everything. As far as we could see, sales on a local currency basis have also risen, which are free from the changes in currency rates. According to the Company, this is due to the success of promotions for Q2 (April to June), including TV ads, as well as favorable weather conditions in the said market. By sales channel, sales were strong, especially to home centers. On the other hand, the Company has suffered from a decline in earnings on the Agricultural Machinery side as well as on the Industrial Machinery, but this only had a marginal impact on the Company’s earnings as a whole.

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).