Bridge Report Iriso Electronics Co., Ltd. (6908)

Transcription

1 Bridge Report Iriso Electronics Co., Ltd. (6908) Company Iriso Electronics Co., Ltd. Code No Exchange JASDAQ Chairman Sadao Sato President Toshiyuki Imazu Headquarters , Shinyokohama, Kohoku-ku, Yokohama, Kanagawa Sadao Sato Chariman Toshiyuki Imazu President Business Description Mid tier manufacturer of connectors, with main product applications in automobile, industrial equipment, digital consumer electronics realms. The bulk of products are custom manufactured. Year End March URL - Stock Information - Share Price Shares Outstanding Market Cap ROE(actual) Trading Unit 5,570 11,445,698 shares billion 16.1% 100 shares DPS(Est.) Dividend Yield(Est.) EPS(Est.) PER(Est.) BPS(actual) PBR(actual) % x 2, x * Share price as of close on June 11, Number of shares outstanding at end of the most recent quarter excluding treasury shares. - Earnings Trend - Fiscal Year Sales Operating Income Ordinary Income Net Income EPS DPS March ,138 2,008 1,767 1, March ,566 2,891 2,768 2, March ,722 2,760 2,660 1, March ,788 2,562 3,061 1, March ,838 5,635 6,233 4, March 2015 Est. 35,000 6,230 6,000 4, * Estimates are those of the Company This Bridge Report provides details about the fiscal year March 2014 earnings results and fiscal year March 2015 earnings estimates for Iriso Electronics Co., Ltd. 1. Company Overview 2. Fiscal Year March 2014 Earnings Overview 3. Fiscal Year March 2015 Earnings Estimates 4. Conclusions 1

2 Key Points Iriso Electronics Co., Ltd. conducts development, manufacturing and sales of connectors used to connect printed circuit boards. Its products include the main Floating B to B connectors and are high in value addition. About 80% of sales are derived from automobile use applications, and an expansion in electric and hybrid vehicles sales is an opportunity for Iriso to expand its business. The Company has taken aggressive steps to launch its business in overseas markets, and now the bulk of both sales and manufacturing are derived from overseas markets. During fiscal year March 2014, sales rose by 32.5% year-over-year to 32.8 billion, rising above the 30.0 billion level for the first time. Demand for products from automobile applications from within and outside of Japan remained strong. Other business also trended favorably and recorded double digit sales growth. While sales, general and administrative expenses rose, gross margin rose by close to 5% points on the back of the positive impact of the weaker yen, rationalization efforts and higher sales, allowing operating income to rise by a large margin to billion. Both sales and profits rose to new record highs. During fiscal year March 2015, sales are expected to rise by 6.6% year-over-year to 35.0 billion. Iriso will focus more of its attention upon the realm of car electronics within automobile applications, and will conduct business activities to expand its industrial use applications business on a global basis. Continuing efforts to reduce costs are expected to allow operating income to rise by double digits. However, ordinary income is expected to decline due to conservative foreign exchange estimates. The same level of dividends as the previous term of 40 per share is expected to be maintained. Demand had been expected to decline due to anticipatory demand ahead of the consumption tax hike from April 1, but demand in April actually exceeded expectations and Iriso got off to a good start in the new fiscal year. Furthermore, Iriso s earnings during the first quarter should be watched closely to assess the potential for Iriso to beat its earnings estimates bused upon conservative foreign exchange estimates. 1. Company Overview IRISO ELECTRONICS CO., LTD. is a company that develops, manufactures, and sells connectors used to connect circuit boards. Including the main product of Floating B to B connectors, all of IRISO s products boast of high value addition. 80% of the Company s sales are connectors used in interior vehicle device applications and are provided to major Japanese and overseas automobile manufacturers. The growing diffusion of electric and hybrid vehicles and the subsequent increase in demand for connectors presents an opportunity for IRISO to expand its sales. IRISO took aggressive steps to enter overseas markets at an early stage, and now the bulk of both its sales and production are derived from overseas markets. <Corporate History> IRISO was established in 1966 by Sadao Sato, the current Chairman. Along with the diffusion of televisions and audio equipments, demand for connectors as a replacement for traditional soldering techniques grew rapidly because of their ability to make connection of wiring easier. In response to this increase in demand, IRISO developed and began manufacturing high value added pin products with its entry to the connector market. In the 1980s, IRISO also entered the market for interior vehicle devices, currently its main product area, with high value added products including the B to B. The unique ability of its products to prevent off-center installation of wiring connections was highly regarded by customers and allowed it to acquire high market share. IRISO took aggressive steps to enter overseas markets at an early stage in response to the requests of its clients. The company name IRISO was derived from IRISO Village, Iruma-gun, Saitama Prefecture (Currently called Sayama City, Saitama Prefecture) where its first customer was headquartered, so that the Company would always remember that very first customer December Established IRISO ELECTRONICS CO., LTD. in Shimonumabe, Kawasaki-shi, Kanagawa 1977 September Developed pins with tapered leading edges for use as connectors and began production and sales 1978 December Established IRS (S) PTE. LTD. in Singapore for production and sales of pins and multiple pin connectors 1982 July Began production and sales of jumper connectors with switching function, and launched a full scale entry into the connector 2

3 field 1985 February Began production and sales of board-to-board connectors to connect printed circuit boards 1993 June Established Shanghai IRISO ELECTRONICS CO., LTD. in Shanghai, China for the production and sales of pins and multiple pin connectors 1994 April Established IRISO U.S.A., INC. in Chicago, Illinois for the sale of pins and multiple pin connectors 1994 September Listed its shares on the Over-The -Counter Market with the Securities Dealers Association of Japan (Currently the Osaka Securities Exchange JASDAQ Market) 1996 January Established IRISO ELECTRONICS PHILIPPINES INC. in Cavite Economic Zone, Philippines 1996 January Acquired ISO9001 certification 1999 October Established IRISO ELECTRONICS SINGAPORE PTE., LTD. in Tuas, Singapore 1999 November Established IRISO ELECTRONICS (HONG KONG) LIMITED (Operation of Hong Kong Sales Office transferred to new company) 2000 April Established IRISO ELECTRONICS EUROPE GMBH in Germany (Operation of Europe Sales Office and German Liaison Office transferred to new company) 2000 October Opened IRISO (Shanghai) Trading Co., Ltd. in Shanghai, China 2003 March Opened IRISO ELECTRONICS (THAILAND) LTD. in Bangkok, Thailand (Operation of Bangkok Representative Office transferred to new company) 2006 August Opened IRISO ELECTRONICS (HK) LTD. Taiwan Branch Office in Taiwan 2006 November Established IRISO ELECTRONICS VIETNAM CO., LTD. in Hanoi, Vietnam 2008 August Established IRISO Shanghai R&D Center Co., Ltd. in Shanghai, China 2010 December Established IRISO Electronics Co., Ltd. India Liaison Office in Bangalore, India <Management Strategy> As a Bridge to the Future Respecting individual values, creating abundant value, and contributing to society <Business Description> <What is A Connector?> A connector refers to a part or an instrument that is used to connect circuit boards used in electronic circuit and optical communications applications. In circuit boards connected by soldering or pressed bonding, connections need to be cut at the time of decoupling and reattachment is very difficult. However when connectors are used, the connections can be easily decoupled and reattached repeatedly using simple tools. Consequently, connectors are now used in almost all electronic devices. (Source: IRISO Website) 3

4 The most representative connector manufactured by IRISO is the B to B Connector, which is a registered trademark (Board to board connector). B to B connector is a connector used to directly connect circuit boards that allows them to be connected in vertical, parallel, and horizontal connections. Some B to B connector products include products called Floating B to B with the unique capability developed by IRISO which enables the connecting portion to move several millimeters so that it can withstand strong impacts. Because normal fixed connectors do not allow for any movement, workers must take special care at the time of assembling connectors to sockets to ensure a proper fit is achieved, which leads to lower productivity. However, floating connectors allow for some movement in the assembly of connectors to sockets and enables smoother and easier assembly, thereby raising productivity. Furthermore in response to requests from customers to make both connectors and sockets movable to increase assembly productivity, IRISO has developed products where both the sockets and connector plugs are movable (Double floating). This also makes the connectors resistant to strong impacts, and raises the productivity of the assembly process by the clients. In addition, the ability for the connectors and sockets to move makes them extremely attractive in automobile applications where they can absorb shock and vibrations during driving. In addition to those mentioned above, some of the other product lineup applications are described below. FPC/ FFC Connectors Connectors developed for FPC (Flexible Printed Circuits) boards and FFC (Flexible Flat Cable) cable applications are connectors that can be locked into position with FPCs/FFCs using only slight pressure. I/F Connectors I/F is an acronym for interface, and I/F connectors is a term that describes connectors used to transmit signals between various equipment and are also called I/O (Input, output) connectors. They are used in car navigation, personal computers, and various other equipments to provide electricity, and audio and visual output signals. P/H P/H is a term used to describe the basic form of plug connectors housing pins formed by cutting and processing wire material (Electrical conductor) used in a wide variety of applications to connect internal parts of equipment (Circuit board connections). A side view of the P/H looks like the wire base (Called kenzan in Japanese) used in Japanese flower arrangements to hold flowers in place. The female half of the connector is called the socket, and male half called plug. Compression Connectors Compression connectors use a spring to aid in the insertion and removal process, and they contribute to reduce space required by the connectors. They are used for connector used within cellular telephone applications, and cradles. <Business Segment Trends> 4

5 (Source: IRISO website, FY3/14 results) Sales ( mn) Share Main Usages Automobile 26, % Audio, Visual, Navigation 16, % Car audio, visual, navigation systems Electronics 10, % Car air conditioning, power windows, seat heaters, other electric components Consumer 5, % Digital cameras, cellular telephones, game equipment, LCD televisions Industrial % Factory automation, medical equipment Total 32, % IRISO Electronics main customers in the realm of automobile applications are the Tier 1 automobile parts manufacturers that supply parts and products directly to automobile manufacturers. Moreover, IRISO s products are used by all domestic automobile manufacturers and most of the major overseas automobile manufacturers. In the automobile applications realm, a large amount of the products are high value added products that are customized according to the specifications of customers. Furthermore, the automobile manufacturers require parts manufacturers to produce parts that live up to the highest quality and safety standards. The long track record of IRISO s products used in automobile applications with their early entry to the market is an evidence of the superiority of their products. In the future, the importance of electrical systems will increase along with the diffusion of electric vehicles (EV), hybrid vehicles (HV) and plug-in hybrid vehicles (PHV). Furthermore, in response to the need for even higher levels of product safety, the increase in the number of vehicles equipped with vehicle distance measuring millimeter wave radars and onboard cameras will contribute to dramatic growth in demand for electronics parts and connectors. And while numerous connectors in electronic parts are found in audio and visual, and navigation equipment used in automobiles, demand from new automobile applications including connectors for high voltage and output electronic parts for drive-train motors of hybrid and electric cars is expected to grow strongly and lead to expanded opportunities for IRISO. In the realm of consumer applications, general purpose products are common and their simplicity tends to increase pricing competition. While the industrial applications realm is still small relative to overall sales, the knowhow and technology accumulated in the highly demanding automobile applications can be used to grow this business in the future. <Future Sales and Production Strategies> As described in the corporate history section, a subsidiary was established in Singapore 12 years after IRISO was founded in 1978, marking the start of overseas production and sales. And while their track record was still not that strong at the time, IRISO was able to strengthen its relationships with its customers by making investments to expand its business in overseas markets along with them. 5

6 As a result of these efforts, its overseas business steadily grew and also led to an expansion in its business with these customers within Japan. Based on the management knowhow and track record established over the course of the Company s operation, a decision has been made to further fortify its overseas business in order to expand its overall business. Currently approximately 70% of sales and 80% of production derive from overseas. Furthermore the strategy for future sales and production is outlined below. Sales Strategy IRISO will further fortify the four pillars of its sales structure in Japan, Europe and North America, China, and ASEAN. IRISO currently stations engineers in both Germany and America, but will also station engineers in Korea and Singapore. Furthermore, facilities will eventually be established in South America, which is currently covered by the United States operations, India and other parts of the ASEAN region to capture growing demand from emerging countries. The Company will establish a sales structure that combines technology with its sales function. Another important issue is the need to hire and cultivate highly skilled local staff, and to exchange and train human resources on a global basis in order to expand transactions with local companies in overseas markets. Production Strategy Currently, the following four projects are being implemented. 1 Cost of Sales Reduction Project Fortify cost competitiveness 2 Business Continuity Plan Creation Project The Business Continuity Plan (BCP) is an action plan that is designed to limit the impact of various crises upon important business tasks and enables quick recovery and restart from interruptions due to unforeseen conditions to ensure the continuation of business operations, and will be created as a response to natural disasters and accidents. The BCP will be implemented at IRISO s four manufacturing plants in Ibaraki Prefecture, Shanghai, Vietnam, and the Philippines. 3 Vietnam Business Expansion Project The share of the Production of the Vietnam Plant to be raised Relative to Other Four Plants Maximize marginal profitability 4 Production Rationalization Project Review material costs and fixed expenses, in order to reduce cost structure Through these projects, IRISO seeks to secure competitiveness in craftsmanship through the realization of cost reductions, maintain mass production structure by standardizing production quality levels, and improve credibility of craftsmanship by eradicating customer complaints. <ROE Analysis> FY3/11 FY3/12 FY3/13 FY3/14 ROE (%) Net Income Margin (%) Total Asset Turnover Ratio (x) Leverage (x) <Reference: ROE by Industry for TSE First and Second Sections, and Mothers Market> FY2011 FY2012 (%) (4/11 ~3/12) (4/12 ~ 3/13) All Industries (Ex. Finance) Manufacturing

7 Non-Manufacturing 5, Electrical Equipment * Source: Tokyo Stock Exchange Website Summary of Earnings Digest by Listed Companies * Return on equity is an indicator that multiplies the fundamental elements of net income margin, by total asset turnover ratio by leverage. Iriso Electronics boasted of a high return on equity ratio of 16.1% during fiscal year March This high ROE has been achieved without booking large amounts of extraordinary income and is attributed to the Company s ability to maintain low levels of leverage and its improved profitability. Also, further increases in total asset turnover ratio (To over 1.0x levels) can contribute to further improvements in ROE. 2. Fiscal Year March 2014 Earnings Overview (1) Consolidated Earnings FY3/13 Share FY3/14 Share YY Change Divergence from Initial Est. Sales 24, % 32, % +32.5% +17.3% Gross Income 7, % 11, % +52.9% - SG&A 5, % 6, % +19.0% - Operating Income 2, % 5, % % +40.5% Ordinary Income 3, % 6, % % +64.0% Net Income 1, %% 4, % % +86.4% Foreign Exchange Rates, Average 83.23/$ / /$ / 90.00/$ / * Figures quoted in the Divergence from Initial Estimates column for foreign exchange rates average are the average exchange rate forecast at the start of the term. On-vehicle Equipment Contributes to Double Digit Increase in Sales and Profits, Both Reach New Record Highs Sales rose by 32.5% year-over-year to 32.8 billion, rising above the 30.0 billion level for the first time. Demand from both overseas and domestic markets for the main on-vehicle equipment remained strong. Strength in the consumer and industrial related markets also contributed to the double digit growth in sales. And despite a double digit increase in sales, general and administrative expenses, the positive effect of the weaker yen, successful rationalization efforts and higher sales allowed gross margin to improve by nearly 5% points and operating income to rise by a large margin to billion. Both sales and profits reached new record highs. Sales Trend by Market FY3/14 YY Change Share On-vehicle Equipment 26, % 81.3% Audio, Visual, Navigation 16, % 50.3% Electronics 10, % 31.0% Consumer 5, % 15.8% Industrial % 2.9% Total 32, % 100.0% Demand for on-vehicle equipment remained strong on the back of strength in the United States and China markets, allowing overseas sales to rise by 45.9% year-over-year. Sales within Japan remained firm at 7.6% year-over-year growth, and demand in Europe began to recover. In addition to car navigation, car audio equipment, and cluster use applications, sales of products used in millimeter wave radar and other safety applications rose strongly. In the consumer related market, demand from printer applications continued to trend favorably, and demand for connectors used in new game equipment was strong. Even excluding the contribution of new game equipment, sales were able to rise from the previous year s levels. 7

8 In the industrial related market, demand from industrial equipment and LED lighting applications trended favorably. Furthermore, Iriso is expected to conduct efforts to accelerate the sales of this division in the coming term. Sales Trend by Geographic Region (January to March) 4Q FY3/14 YY Change Share Japan 1, % 20.7% China, Korea 2, % 28.4% Europe 1, % 21.0% Singapore % 10.1% United States 1, % 13.5% Thailand % 6.3% Total 8, % 100.0% Sales to all geographic regions recorded positive growth. The ratio of domestic to overseas sales during the full fiscal year was 20.4% to 79.6%. Sales Trend by Product (January to March) 4Q FY3/14 YY Change Share FPC 2, % 28.4% BtoB 3, % 41.7% P/H % 5.4% On-vehicle Equipment IF 1, % 17.1% Others % 7.3% Total 8, % 100.0% Sales of all product applications recorded positive growth. (2) Financial Conditions and Cash Flow Financial Conditions End 3/13 End 3/14 End 3/13 End 3/14 Current Assets 18,119 22,189 Current Liabilities 7,187 6,261 Cash, Equivalents 5,773 7,634 Payables 2,560 2,819 Receivables 6,973 8,434 ST Interest Bearing Liabilities 2, Inventories 4,605 5,099 Fixed Liabilities 1,074 1,113 Fixed Assets 14,690 15,146 LT Interest Bearing Liabilities Tangible Fixed Assets 13,355 13,955 Total Liabilities 8,261 7,375 Intangible Fixed Assets Capital 24,398 28,566 Investments, Other Assets Net Assets 24,548 29,960 Total Assets 32,810 37,336 Total Liabilities, Net Assets 32,810 37,336 Total Liabilities 2, Equity Ratio Cash and equivalents and other current assets rose by 4.0 billion from the end of the previous term. In addition, fixed assets also rose by 0.4 billion and contributed to a 4.5 billion increase in total assets. Declines in short-term interest bearing liabilities contributed to a 0.9 billion decrease in current liabilities. Fixed liabilities remained in line with the previous term, and total liabilities declined by 0.8 billion from the previous term. Net assets rose by 5.4 billion on the back of growth in retained earnings. As a result of these developments, the equity ratio rose by 5.4% points from the previous term to 80.2%. Cash Flow FY3/13 FY3/14 YY Change 8

9 Operating CF 3,887 6,218 +2,330 Investing CF -2,091-2, Free CF 1,796 3,749 +1,953 Financing CF ,167-1,587 Cash, Equivalents 5,773 7,634 +1,860 The large increase in profits contributed to expansion in the net inflow of cash into operating and free cash flows. The net outflow in financing cash flow expanded on the decline in short term debt. Subsequently, cash and equivalents rose by 1.8 billion. (3) Capital Investments, Depreciation, Research and Development FY3/12 FY3/13 FY3/14 Plans FY3/14 Results Capital Investments 2,728 2,331 1,789 2,478 Depreciation 2,012 2,317 2,543 2,743 Research and Development Capital investments increased by 0.7 billion from initial plans, of which 0.2 billion is attributed to fluctuations in foreign exchange. Consequent to this change, deprecation also increased by 0.2 billion from plans. (4) Foreign Exchange Sensitivity Foreign Exchange Sales Impact Profit Impact USD EUR 41 1 RMB * Because of the small unit of RMB (Chinese Yuan) currency, the sensitivity of the RMB versus the yen has been calculated in terms of every 0.1 change The impact of a 1 change in the foreign exchange rate for the United States Dollar is 274 and 75 million in sales and operating income respectively (Full year basis). Going forward, Iriso will use currency hedges and other methods to insulate itself from fluctuations in foreign exchange. Exposure to various currencies in sales terms is 21.5% to the Japanese Yen, 40.7% to the United States Dollar, 17.0% to the Euro, and 20.8% to the Chinese RMB. In terms of operating income, exposure is 22.8% to the Yen, 33.7% to the Dollar, 43.5% to the RMB, and losses were incurred in terms of the Euro. 3. Fiscal Year March 2015 Earnings Estimates (1) Consolidated Earnings FY3/14 Share FY3/15 Est. Share YY Change Sales % 35, % +6.6% Operating Income 5, % 6, % +10.5% Ordinary Income 6, % 6, % -3.7% Net Income 4, % 4, % +2.3% Foreign Exchange Rates, Average /$ / 95.00/$ / Continued Strength in On-vehicle Equipment Expected to Contribute to Higher Sales, Profits Sales are expected to rise by 6.6% year-over-year to 35.0 billion on the back of efforts to expand sales of car electronics and other products in the on-vehicle equipment realm. Ongoing efforts will be conducted to expand sales in the industrial applications realm on a global basis. Continued efforts to reduce costs are also expected to contribute to double-digit increases in operating income. 9

10 Capital investments are expected to rise by 0.4 year-over-year to billion. In addition to investments for rationalization including personnel reduction measures to increase profitability and expansions to increase capacity, other investments will also be made to help protect the environment and to fortify the functions for quality assurance and traceability as the car electronics business expands. Depreciation is expected to rise from the previous term to billion. Dividend payment is expected to remain unchanged at 40 per share for a dividend payout ratio estimate of 10.2%. Domestic, Overseas Market Applications Trends 1H FY3/15 Est. YY Change 2H FY3/15 Est. YY Change FY3/15 Est. YY Change Automobile 13, % 14, % 28, % Consumer 2, % 2, % 5, % Industrial % % 1, % Total 17, % 18, % 35, % Japan 3, % 3, % 7, % Overseas 13, % 14, % 27, % (2) Future Direction While there was no particular reference made at the earnings announcement meeting, Iriso will focus upon the following three points in its future business strategy. 1. Strengthening its Track Record in Automobile Applications Iriso will leverage strengths in its core B to B technologies to expand the provision of its products to infotainment, safety, and electric and hybrid vehicle applications in the automobile related market, which is expected to grow strongly. Iriso seeks to expand the provision of products to various manufacturers worldwide by increasing the earthquake and heat resistance performance of its products. The Company will fortify its functions responsible for product quality assurance and traceability to further improve its credibility. In order to achieve this goal, Iriso will takes steps to further fortify its overseas sales network, which is already strong relative to its relative the scale of its business. Iriso will cultivate industrial market applications to become the next cornerstone of its earnings while expanding its on-vehicle equipment business. 2. Internal Structure Facilitated Iriso will promote facilitation of its infrastructure to achieve its medium to long term goal of 50.0 billion in sales. Some of the main points of Iriso s strategy include the fortification of local staffing and sales engineers, and expansion and strengthening of its overseas manufacturing and sales capabilities. 3. Ongoing Efforts to Strengthen Iriso s Business Structure Ongoing reviews of its earnings structure will be conducted. Iriso will implement a transition to next generation manufacturing methods in order to optimize its overall manufacturing structure. At the same time, it will realize further improvements in cash flow by promoting aggressive investments in rationalization to reduce labor costs. 4. Conclusions Compared with ability of both sales and profits to rise by large margins and reach new record highs in the term just ended, sales and operating income are expected to see 6.6% and 10.5% year-over-year growth, with ordinary income expected to decline during the coming fiscal year. These earnings estimates are based upon conservative assumptions of an increase in depreciation accompanying higher capital investments, and a foreign exchange rate estimate of 95 per United States Dollar (USD). 10

11 Therefore both sales and profits could exceed expectations if the current levels of 102 per USD continue throughout the year. Furthermore, a decline in sales that had been anticipated from April due to the anticipatory demand ahead of the hike in the consumption tax from April 1 has not been as large as had been anticipated and sales got off to a good start in April. Consequently, first quarter earnings should be watched closely for potential positive surprises. As demonstrated in the table below, Iriso boasts of strong profitability as its ranks second out of 14 companies in terms of operating margins, just behind the industry leader of Hirose Electric Co., Ltd., while it ranks eighth in terms of sales. Also, Iriso s efforts to further improve its earnings generation capability and profitability should be watched closely. <List of Connector Related Companies> Code Company Name Sales Operating YY Change Operating Market Estimated PBR Number Income in Est. Margin Capitalization PER 6640 Dai-ichi Seiko Co., Ltd. 43,000 1,400 +3, , Suzuki Co., Ltd. 19, , SMK Corporation 67,100 2, , Yokowo Co. Ltd. 33,800 1, , Hosiden Corporaiton 226,000 3,000 +5, , Hirose Electric Co., Ltd. 130,000 36, , Japan Aviation Electronics 168,000 18, , Industry, Ltd Honda Tsushin Kogyo Co. Ltd. 15, , IRISO ELECTRONICS CO., 35,000 6, , LTD KEL Corporation 9, , Enomoto Co., Ltd. 17, , Yamaichi Electronics Co. Ltd. 23,100 1, , Daito Electron Co. Ltd. 36, , Rhythm Watch Co., Ltd. 37,000 1, , * Units: Million Yen, %, Market capitalization based upon June 11, 2014 closing share price This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration. Copyright(C) 2014 Investment Bridge Co., Ltd. All Rights Reserved. 11